In a move towards improving growth financing and business for small and medium-sized enterprises (SMEs), the Welsh government has approved the UK’s first development bank as part of its strategy to deliver more prosperity and security to Wales. The Development Bank of Wales, which will formally launch in October, will help to retain micro businesses and SMEs throughout the country, writes
BQ Live’s Bryce Wilcock.
Ken Skates, the Welsh government’s cabinet secretary for economy and infrastructure, who is quoted by Wilcock, says the bank will “increase the availability of funding to SMEs to £80m per annum within five years”. Taking into account private sector leverage, “this will have a potentially transformational impact on the Welsh economy of over £170m per annum by 2021–2022”, adds Skates.
An intelligence unit will inform the product development process at the bank, through detailed research into Welsh business requirements, to ensure the organisation responds effectively to market supply and demand changes. According to Wilcock, the bank’s business model will allow it to become self-funding, with grant support for operational costs no longer required from next year.
“The creation of a development bank is innovative in approach and represents a significant step change in the way government-backed funding is delivered in Wales,” says Giles Thorley, chief executive of Finance Wales, who is also quoted by
BQ Live. “A thriving SME population across the whole of Wales is critical to ensuring a prosperous economy.”
In another positive step for SMEs, it was also announced on 18 July that £35m of EU funding would be added to the £136m
Wales Business Fund, which supports start-ups and SMEs across Wales.
BQ Live article
Export expansionUK SMEs are also receiving support through a government initiative to increase British exports. During 2016–2017, UK Export Finance (UKEF) supplied businesses with £3bn in export cash, a 60% increase compared to the previous year, says
BDaily’s Richard Bell. The funding was used to support exports from the UK to 63 countries worldwide, with 79% of the firms benefiting being SMEs.
The export credit agency is also planning to improve support for British businesses through its
Business Plan for 2017–2020. New initiatives will include a “partnership with banks to deliver support directly to trading customers”, as well as “potential procurement opportunities for smaller UK supply chain businesses, incentivising overseas buyers to source goods and services from the UK”, writes Bell.
“UKEF’s new Business Plan is a clear statement of intent: Britain is open for business, and we want to help even more companies realise the world of opportunity out there,” says the Rt Hon. Greg Hands MP, minister for international trade, who is quoted by
BDaily.
BDaily article
Support from the stock exchangesStock exchanges, too, are playing an important role in providing cost-effective finance to SMEs globally. Citing new
data from the World Federation of Exchanges (WFE) and the Milken Institute, which surveyed listed and unlisted SMES from Canada, China, India, Jamaica and South Africa,
LeapRate’s Valentina Kirilova notes that 60% of SMEs consider raising capital at a lower cost an important reason for listing. A further 76% of companies said the lower cost of capital – not other types of capital – was their predominant reason for raising public equity.
Business growth, enhancing the brand, improving reputation and diversifying the investor base were also named as key reasons for SMEs to list, with 74% of firms saying they would list again in the future.
£3bn
The amount of export cash supplied to businesses during 2016–2017 by UK Export Finance
“Our joint research suggests that stock exchanges can contribute positively to SME growth,” says Nandini Sukumar, CEO of the WFE, quoted by Kirilova. “This is particularly important as SMEs play such a vital role in generating economic growth, particularly in developing countries where SMEs are instrumental in creating jobs, building thriving private sectors, and diversifying economies.”
The WFE’s
Small and medium-sized enterprises and SME exchanges report also reveals the more problematic areas of SMEs’ listing experience. Firms name the “time and costs of aligning financial record-keeping and reporting with listings requirements” as well as “meeting ongoing listings requirements” as key issues. Furthermore, for those businesses that do not list, cost, regulatory requirements and lack of understanding are the principal reasons across the various countries surveyed.
In order to make listing more accessible to smaller businesses, stock exchanges could work on containing costs and improving SMEs’ ability to fully understand and meet listing requirements, the report concludes.
“Given the importance of SMEs for job creation and economic growth, expanding access to finance for these businesses is one of the most fundamental issues for inclusive economic development,” adds Staci Warden, executive director at the Milken Institute’s Center for Financial Markets, also cited by
LeapRate.
With so many new initiatives for cost-effective financing, exporting products and services, and boosting business growth, the future looks bright for SMEs, both in the UK and beyond.
LeapRate article
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