Partnering with the Military in Business® Community
October 31, 2023
Just One Step At A Time
December 1, 2023
Equality of access to finance is vital to the health of the SME sector, for start-ups and scale-ups alike. This is particularly poignant during Business Finance Week from the British Business Bank, whose drive to ensure everyone gets a fair crack at access to funding is one that I strongly support…
The ideals of equality and equity in business mean a great deal to me and sit at the very heart of the X-Forces Enterprise (XFE) ethos. As a partner to the British Business Bank, XFE provides support via the Start Up Loans scheme to members of the wider Armed Forces community, a group that historically had difficulties in accessing finance through mainstream sources. One of the main reasons for this being a lack of credit history!
My personal philosophy, and the lifeblood of the Enterprise For Life® concept, is that enterprise skills can have an enormous positive impact on people’s lives, providing them with a foundation upon which they can find fulfilling, rewarding careers through entrepreneurship, intrapreneurship or employment. Those who take the start-up route make an important contribution to the economy, creating jobs in their communities. However, all of this is predicated in no small way on having the finance to begin their self-employment journey.
For inspiration we can look to the example of Muhammed Yunus, a Bengali social entrepreneur, banker and economist who visited some of the poorer areas of Bangladesh and recognised the value of the entrepreneurial efforts of women in these villages. Despite these women having an established supply and demand chain, their inability to access finance meant the majority of their profits were being paid to loan-shark type lenders. Yunus decided to lend a group of women in the village a small amount from which they were able to make a profit.
In contrast to other lenders who believed that the most disadvantaged in society were higher risk borrowers, Yunus believed that because these women applied for the loans as a collective, this would ensure they supported each other to make the repayments, thus acting as a ‘co-guarantor’ for each other. I wrote about this previously and the full story can be read here…
Returning to home shores in the UK, I read with interest a recent Labour Party report entitled Start-Up, Scale-Up: Making Britain the best place to start and grow a business. While Labour has not traditionally been known as the ‘Party of business’, the report’s introduction – penned by Shadow Chancellor Rachel Reeves – calls for fresh thinking around regulation and planning, access to finance, and strategic partnership with industry, along with the ambition to make Britain the high growth, start-up hub of the world. The report also recommends greater autonomy and ‘true independence’ for the British Business Bank.
Furthermore, it makes clear that both women and ethnic minority founders suffer from underinvestment relative to other founders. New businesses are almost three times as likely to be started by men as by women, and less than 5% of venture funding currently goes to female founders. 0.24% of all venture funding between 2009 and 2019 went to Black founders, a figure that declined to 0.02% for Black female founders. The exception here is social enterprises – 47% of which are run by women and 12% of which are led by someone from an ethnic minority, twice as high as the rest of the population. Why the disparity?
The Conservatives, of course, have always been viewed as pro-business. After all, it was the late Lord Young – the first ever Patron of XFE – who was the driving force behind the creation of the British Business Bank and the Start Up Loans scheme. More recently, Secretary of State for Business and Trade, Kemi Badenoch, demonstrated her commitment to the sector at the opening of the Federation of Small Businesses (FSB) new offices in Westminster, committing to tackling late payments, reducing regulatory barriers, and boosting exports. One could argue that she, as a woman of colour in a high-ranking government post, is well placed to bring about the changes required in terms of funding. I am proud to say that I’m one of the Policy Champions for FSB and give my time freely to them as they are undoubtedly making a huge contribution in influencing and changing policy for small businesses.
Whoever forms the next government must close the investment gap and provide access to finance for any British citizen with the drive, creativity, and heart to launch a new business. We are, as we have always been, a nation of innovators – what we need now is equality and equity in empowerment.
Many thanks go to the Team and British Business Bank for their tireless work and commitment in this field, particularly as we face some of the most challenges times since 2019.
