Thursday 27 September 2023
London Chamber of Commerce and Industry (LCCI) is representing the voices of thousands of business in the capital at the party conferences- to urge the Government to work with financial institutions to overcome barriers around access to finance; in order to create a diverse and level-playing field in its true sense.
LCCI made a submission to the Treasury Select Committee’s inquiry into SME finance with several recommendations to support women and ethnic-minority-led businesses, to create equal opportunities for all types of micro and small businesses.
LCCI’s research on ethnic diversity in business shows that ethnic minority led businesses were far more likely to avoid approaching financial institutions due to concerns about being prejudiced against. Ethnic minority-led businesses also reported hurdles in their interactions with banks, for example in opening bank accounts and applying for loans and tend to be averse to taking on debt.
One of the key recommendations by LCCI is to create a Strategic Growth Fund that will help address the funding problems ethnic minority founders and business leaders face. There is an urgent need for introduction of targeted programmes to assist ethnic minority-led businesses to access finance. There must also be wide promotion of these programmes to ensure that those who can benefit the most are fully aware of the opportunities available to them.
Richard Burge, Chief Executive Officer at London Chamber of Commerce and Industry said:
“Enough has been said in the public sphere about the global nature of London business market and the manifold benefits of having a diverse ecosystem. However, very little has been done to achieve this in practical terms. SMEs are the backbone of a modern, flourishing London economy. Unfortunately, the current barriers to access finance stifle many innovative, revolutionary women and ethnic minority led businesses.
We need a thorough review of lending practices to eliminate requirements that place hurdles in the path of ethnic minority and women owned businesses. We must push for change and this starts with reducing red tape and exclusionary practices that create - and sustain - barriers to raising capital.”
James Watkins, Head of Policy and Public Impact at London Chamber of Commerce and Industry said:
“Time has come to move away from diversity from being seen by some stakeholders as ‘nice to have’ to ‘essential to success and growth’. In our country, women and girls make up 50% of the population however, reports have indicated that 53% of women in the UK said they found it difficult to start a business. LCCI through its Women in Business Group, Black Business Association and Asian Business Associations is calling on the Government to support and work with entrepreneurial ecosystems, that build strong networks for capital, expertise and information for women and minority-ethnic businesses.”
LCCI members highlighted that too many financial institutions do not give the same level of credibility to women as their male counterparts. They further added that women would be less likely to even attempt to access finance, which stems from a lack of guidance when applying. Finance and taking on debt are seen to be risky, an issue which should be addressed through more outreach from financial institutions to communities where finance is negatively perceived.
Government must work with financial institutions to help challenge the myths around finance that many SMEs hold and raise awareness of the different types of lenders that can provide SMEs with the finance that will help them scale up and grow.
Currently there are no focussed support funds from the Bank for SMEs in the capital. LCCI therefore, calls on the British Business Bank to not overlook providing support to businesses in London.
Businesses must be supported in establishing strong connections with advisors who can provide insights on how financial products can be used to grow their firm and help demystify some of the concerns around taking on debt.
Notes to Editors:
- London Chamber's submission is available on request.
- Read LCCI’s ethnic diversity in business report.
Media contacts:
Kriti Gupta – Media Officer
E- kgupta@londonchamber.co.uk
M- +44 (0) 7967459014
Vittoria Zerbini – Media Assistant
E- vzerbini@londonchamber.co.uk
M- +44 (0) 7831 637843
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