Research conducted by the British Business Bank demonstrates that one of the principal barriers faced by smaller businesses in Wales when accessing finance and investment is a lack of knowledge about what is available.
Businesses in Wales also typically rely on traditional forms of debt finance, such as bank loans and credit cards, as a source of finance more than other nations and regions of the UK. This means that the appetite for more alternative means of finance and investment are lower than they should be in an economy with growth ambitions.
Jess Phillips-Harris, Senior Manager for Wales at the British Business Bank, said:
“If a smaller business doesn’t know what avenues it has to finance or investment, then its capacity to scale is compromised. This is a huge part of what the bank is working hard to do – to share independent and impartial information with the smaller business community about the large range of finance options available to them, while at the same time working to broaden and diversify those options.”
How ready a smaller business is for investment or finance does of course vary enormously from business to business. Some smaller businesses may be well on their way to being finance ready, having gone through the various stages required to move forwards. These include evaluating your growth ambitions, evaluating your business plan and understanding the type of finance you need. Others may be at the very start of their journey.
“One of the questions I get asked a lot by smaller businesses in Wales, is ‘how do I know if my business is ready for investment?’”, said Jess. “I believe it’s a good idea to engage early with finance professionals, as they can help prepare you for what’s ahead and guide you on your finance journey. Business advisors know what it takes to get a smaller business investment ready, so be sure to access their knowledge. Then when the time comes to access investment, you’ll be in an excellent position.”
A key way the British Business Bank is working to address the challenges smaller businesses in Wales face in gaining access to finance is by broadening the access points available in what has previously been described as a fairly narrow marketplace.
For example, the bank supports programmes like the recently established Women Angels of Wales, a female-led angel investing syndicate dedicated to investing in and supporting female-led businesses located in Wales. And most notably in November 2023 the bank launched the £130 million Investment Fund for Wales which was launched in order to boost the supply and diversity of early-stage finance to small and medium-sized businesses in Wales.
The Investment Fund for Wales offers a range of commercial finance options including smaller loans from £25,000 to £100,000 via BCRS Business Loans; debt finance from £100,000 to £2 million via FW Capital and equity investment up to £5 million via Foresight.
“We know that securing investment can be a difficult road for smaller business owners,” said Jess. “It’s the reason that the Investment Fund for Wales exists – to broaden the investment offering available to Welsh businesses. The fund has also been designed for those who might not otherwise receive investment elsewhere and it is mandated to reach the rural and coastal parts of Wales where investment levels are historically lower.”
For more information about finance options and providers available to Welsh smaller businesses: https://www.british-business-bank.co.uk
