Ac­cess to funds hold­ing back BAME-led com­pa­nies

The Daily Telegraph - Business - - Business - By Michael O’Dy­wer

BUSI­NESSES run by peo­ple from eth­nic mi­nori­ties con­trib­ute £25bn a year to the UK econ­omy but are be­ing held back by bar­ri­ers to ac­cess­ing fi­nance, new re­search shows.

Dif­fi­cul­ties ac­cess­ing fi­nance are a key ob­sta­cle to growth for eth­nic mi­nor­ity busi­nesses, ac­cord­ing to the study by the Fed­er­a­tion of Small Busi­nesses (FSB) and As­ton Univer­sity’s Cen­tre for Re­search in Eth­nic Mi­nor­ity En­trepreneur­ship.

It comes amid fears the coro­n­avirus re­ces­sion could widen the em­ploy­ment gap of nearly 12pc be­tween white work­ers and those from eth­nic mi­nori­ties. This chart shows how eth­nic mi­nori­ties have been more vul­ner­a­ble to job losses than white coun­ter­parts dur­ing the pan­demic.

Re­searchers found that some busi­ness own­ers from mi­nor­ity eth­nic groups strug­gle to raise funds be­cause they do not have a net­work of peo­ple who can of­fer fi­nance.

Khalee­lah Jones, who has a PhD and an MBA, runs a dig­i­tal and mar­ket­ing agency in Lon­don, said: “I don’t have the op­tion to raise money from friends and fam­ily. When I’ve gone out to raise funds it’s been dif­fi­cult be­cause we don’t have pre-ex­ist­ing re­la­tion­ships with banks to raise debt fi­nanc­ing and to raise eq­uity fi­nanc­ing. I think the lack of net­works is a fac­tor in ac­cess to fi­nance.”

The FSB called for the Gov­ern­ment to launch a ded­i­cated scheme to help mi­nor­ity-led busi­nesses ac­cess ex­ter­nal fi­nance.

De­spite the chal­lenge of rais­ing funds, the study found that eth­nic mi­nor­ity busi­nesses, the ma­jor­ity of which are run by self-em­ployed peo­ple, were more in­no­va­tive than other firms and more likely to be ex­porters.

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