In a competitive business environment, embracing diversity can bring real benefits, with numerous studies reporting that businesses with diverse teams outperform their less diverse counterparts on many measures, not least financially.
Fostering a diverse and inclusive workplace can also drive innovation, improve employee satisfaction and enhance customer relationships. A commitment to DEI helps attract top talent, strengthens company culture and ensures that business decisions reflect a broad range of perspectives.
To stand out and survive, businesses need to have a broad appeal and serve a diverse customer base. Inclusive businesses are far better placed to do this, but access to funding is critical to the success of any business.
The British Business Bank’s Small Business Finance Markets (SBFM) 2024/25 report assesses the current funding landscape for smaller businesses, and its annual survey provides interesting insights into how the market is working for smaller businesses and, within that, for different ethnic groups.
The latest data shows that challenger and specialist banks are outperforming the biggest UK banks when it comes to providing financial support for smaller businesses. Great strides are being made by these nimble financial players set up to support smaller enterprises.
However, the findings show challenges persist for Ethnic Minority-led businesses, which report difficulties in accessing finance to start or scale up their business. Over two fifths (43%) of Ethnic Minority-led businesses find it difficult to secure finance, with Black-led businesses being the most affected (59%).
It’s disappointing to see that Ethnicity Minority-led businesses are facing difficulties in securing finance to grow their business. Clearly, more work needs to be done to ensure all people have access to the financial backing to set up shop.
In order to boost the UK’s economy, financial support must be accessible to all, in tandem with expert business advice that sets out a clear path on how to establish a successful, future-proof business.
The report shows that Ethnic-Minority led businesses are shown to have a greater appetite for expansion but despite these ambitions several barriers persist, including complicated application processes, limited access to financial networks and a lack of information about funding that’s available to them. Having little or no knowledge about available funding is more likely to be cited by underrepresented entrepreneurs.
Of those that needed finance but didn’t apply, over half of Ethnic Minority-led businesses (56%) didn’t apply because they didn’t know where to find appropriate funding, significantly higher than the 36% of White-led businesses reporting the same. What’s more, nearly half (49%) of Asian and Other Ethnic Minority entrepreneurs cited ‘difficulties getting finance’ as the reason for stopping work on their business idea, compared to 25% of White entrepreneurs.
The data is clear – opportunities to start up businesses in the UK are being missed because aspiring business owners are unaware of, or unable to access, financial support.
Smaller businesses account for the majority of the UK’s economy, and we are proud to provide continual support to a melting pot of entrepreneurial ideas. It’s also our duty to enable all aspiring entrepreneurs, whatever their background. We at Start Up Loans do this by providing them with the necessary tools and knowledge required to bring a business plan to life.
Start Up Loan’s commitment to diversity has been instrumental in the programme’s success. Since 2012, the programme has provided over £700 million in funding to more than 85,000 businesses with founders from underrepresented groups. 40% of loans have gone to women and 19% to people from Ethnic Minority groups – not including white minorities. More than a fifth (23%) of loans have gone to people formerly unemployed or economically inactive.
This year’s SBFM report findings are a call to action to ensure that no entrepreneur is left behind due to systemic barriers. We’re proud to empower inspiring business owners from all backgrounds, and it’s now more important than ever to provide the financial backing and expert support to start or scale up businesses working to elevate the UK’s economy.
