Study finds lack of finance for ethnic minority owned SMEs hinders overall economic growth
- 48% of British Asians & 57% of Black Britons want to improve their lifestyles through the risk of starting a business
- 34% White Brits want to improve their lifestyles through the risk of starting a business
- 49% of British Asians & 56% of Black Britons stated if they were to start a business, they’d be looking to procure investment to facilitate rapid growth
A new report from The Centre for Research in Ethnic Minority Entrepreneurship commissioned in collaboration with NatWest has unveiled that additional support for ethnic minority founded businesses could grow the British economy by £75bn. The report outlined 10 steps to transform support for ethnic minority owned businesses by broadening policy agendas for inclusive growth, productivity and innovation. QU – a business consultancy for minority and female founded businesses – says the report highlights crucial imbalances that hinder nurturing a more inclusive business arena.
To better understand the adversity ethnic minorities face in scaling their businesses, QU has also commissioned landmark national research investigating the critical lack of diversity in support and access to growth capital. The study found that 57% and 48% of Black and Asian Brits respectively are looking to improve their lifestyles through starting a business, compared to just 34% White British respondents. The research further unveiled that 56% and 49% of Black and Asian Brits were looking to secure finance for their business growth, yet the Guardian reports that White-owned companies are twice as likely to be granted loans than Black-owned businesses.
A study by the British Business Bank found this lack of access to finance has led 49% of ethnic minority entrepreneurs to stop working on their business idea, halting a wave of entrepreneurs from entering the market. According to QU, several factors that define loan outcomes are based on missing financial knowledge rather than based on ethnicity. QU focus on informing and guiding ethnic minority businesses to the right places to source capital, with simple actions that will increase the probability of securing finance – such as improving credit-scoring and devising financial models.