Fostering SME growth in Cornwall

I was delighted to be invited to attend a roundtable discussion event recently at the Cornwall council offices, hosted by the new chair of the board of the British Business Bank (BBB), Stephen Welton CBE. Amongst the attendees were other professionals, representatives from local lending organisations and businesses and grant fund distributors.

The British Business Bank – tasked with driving economic growth

Now celebrating its tenth year in operation, the BBB has been tasked with driving growth in the UK. They do this by working with delivery partners such as banks, leasing and lending companies and venture capital funds.

Stephen reminded us the name British Business Bank is actually something of a misnomer, since the organisation is not a banking institution. The BBB is a government-owned economic development bank, which sits under the government’s department for business and trade, However, it has an independent management board.

The roundtable discussion concentrated on how the BBB can drive growth in small and medium enterprises (SMEs) in particular. According to figures produced by the department for business and trade, there were an estimated 5.6 million in the UK at the start of 2023. This makes up 99.86% of the private sector businesses in the UK.

Naturally, to drive growth in the UK, there needs to be a drive to grow SMEs.

Barriers to growth in SMEs in Cornwall and Isles of Scilly

Issues raised by the roundtable discussion included:

1. Skills / housing
2. Access to finance/ flaws in finance eco-system

The latter point encompassed:

• Perceived lack of appetite to lend from traditional lenders.
• Lack of awareness of alternative funders (see further below).
• Poor referral system.
• Lack of data sharing agreements.

As highlighted in the recent Small Business Finance Markets Report 2023/24 (issued by the BBB), the lending landscape has changed significantly over the last decade. So-called ‘challenger banks’ now make up around 52% of small business lending. This came as a surprise to some members of the group, despite the breadth of experience and knowledge surrounding the table.

UK invested capital in perspective

Stephen highlighted that nationally, the UK has a poor rate of invested capital when compared to other economies across the world such as Canada and Australia. One potential line of enquiry for changing this could be the use of pension funds to invest in UK growth. However, although this does not require legislative changes, it would require changes to be made under the current pensions regulator regulations. Therefore this change is not something which will happen overnight.

Grant funding

Grant funding in the area was discussed briefly although was not specifically within the remit of the meeting. However, it can’t be ignored that grants have historically had a valuable place in the economic growth of small businesses. We wait eagerly to hear what may follow the UK shared prosperity funding which is due to end in March 2025.

Finance in Cornwall 2024

At our upcoming Finance in Cornwall 2024, we have representatives from grant, debt and equity. We have 20 funders and business support agencies represented, covering funding from start up loads to public listing. These include:

• Grants for innovation
• Regional loan finance
• Cash flow lending
• Secured short term funding
• Working capital finance
• Property / asset finance
• International trade finance
• Regional equity funding
• Business angels
• Crowdfunding/ marketplace equity
• Venture capital

I, personally, also have a slot that touches on the organisations that give valuable support, through information dissemination and / or networking opportunities, to businesses in the region. I see these organisations as having a pivotal role in assisting with economic growth ambitions for the region.

Book your place at this year’s Finance in Cornwall event.