Levelling the playing field for small businesses - Mark Sterritt

As the mood shifted towards recovery last year, we saw a notable upturn in the demand for finance.As the mood shifted towards recovery last year, we saw a notable upturn in the demand for finance.
As the mood shifted towards recovery last year, we saw a notable upturn in the demand for finance.
Scotland’s smaller businesses continue to face a range of challenges amid the ongoing pandemic, but as the mood shifted towards recovery last year, we saw a notable upturn in the demand for finance. Equity investment, in particular, provided companies in Scotland with a platform for growth and development.

According to new data, published by the British Business Bank in its eighth annual Small Business Finance Markets report, equity investment in Scotland’s vibrant community of smaller businesses had soared to £403 million by the end of September – more than double the same period in 2020. A total of 147 equity deals were recorded, equating to 8 per cent of the UK’s equity deal activity – higher than Scotland’s 6 per cent share of the business population.

Across the rest of the UK, there was a similar increase in equity investment, with overall equity deal values on track to double from the £8.8 billion total seen in 2020. By quarter three, Scottish investment was already 42 per cent ahead of the total £283m registered during the full 12 months of 2020.

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Despite the positives here north of the border, our research highlights that geographic imbalances remain across the UK with external finance concentrated in London, where firms attracted 70 per cent of 2021 Q1-Q3 investment value. This only underlines the importance of ensuring that smaller businesses at any stage of growth can access the funding they need to achieve their goals, regardless of their location.

Helping to address this, alongside a range of programmes already in place, the UK Government announced £150m to provide a new fund for Scottish businesses as part of the October 2021 Spending Review. It will be administered by the British Business Bank and we will be working closely with Scottish Enterprise, the Scottish National Investment Bank and other local stakeholders to deliver this increased support.

As well as the increase in equity deals, the study also showed us that bank lending is close to returning to pre-pandemic levels. In terms of post-pandemic recovery, the British Business Bank’s report suggests there could be continued economic recovery throughout 2022, with strong demand expected for investment to fuel business growth. Although 2022 may still provide a challenging environment for some businesses, many others report that they are seeking to pivot towards growth, improve productivity and transition to a net zero economy.

Providing access to finance will play a big part in ensuring the UK economy continues to grow sustainably, but there are also a number of factors we need to consider that might prevent certain individuals or groups in society from being able to access funding. For example, that the report reveals that while ethnic minority-led businesses are more open to using finance, and more ambitious for business growth, access to finance remains an issue, and they are twice as likely to see access to finance as an obstacle to running their businesses. Additionally, the appetite for using external finance among female entrepreneurs has significantly increased, but it remains lower than for smaller businesses run by men.

The need to level the playing field, both in geographical terms and across under-represented groups is clear. We are committed to supporting entrepreneurs to overcome any hurdles they might face, whether it is knowing how to apply for finance, understanding what types of finance are available to them, or supporting them with the applications process.

For some, 2022 may be another challenging period for their businesses. However, we know that many are tentatively optimistic, still targeting growth and have big plans to make their ambitions a reality after two very uncertain years. Improving access to finance can only help smaller businesses to get there and our aim for this year is to help them on that journey.

To read more about the findings from the Small Business Finance Markets report, visit:

Mark Sterritt, UK Network Director, Scotland at the British Business Bank



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