SMEs showing appetite for growth, says report

WEST Midlands smaller businesses are showing strong signs of recovery and a renewed appetite for growth, according to newly-published research. Equity investment in West Midlands smaller businesses reached £277 million by the end of 2021’s third quarter across 46 deals.

This was an 18 per cent rise on the number of equity deals completed in the same period in 2020, according to new figures revealed from the British Business Bank’s eighth annual Small Business Finance Market Report 2021/22.

However, the West Midlands experienced a 25 per cent drop in investment value.

Nationally, equity investment in smaller businesses surged in 2021, with figures on course to double with one quarter of data still to go. Demand for finance in the West Midlands remains robust, with 32 per cent of smaller businesses surveyed stating they would be happy to use finance to grow.

On the supply side, 2021 saw steady growth in the region’s local venture capital sector, with 21 unique investors involved in venture capital now present in the region.

Sophie Dale-Black, Midlands UK network director at the British Business Bank, said: “This report shows that, following an incredibly challenging economic period for small businesses, not only are we seeing our region’s resilience but there is a clear appetite for growth.

“External finance will continue to play a critical role. There is work to be done, breaking down regional barriers to access to finance remains key to levelling up economic opportunity, which we remain committed to addressing.” In addition to the growth in equity finance, the report indicates that UK debt markets overall are returning to near pre-pandemic levels. Challenger and specialist banks accounted for just over half of the bank lending market (51 per cent) a record share, up from 32 per cent in 2020.

The amount of debt held by smaller businesses has significantly increased compared to pre-pandemic levels due to businesses accessing the Government’s covid19 emergency finance schemes to help them survive.