Supporting Ethnic Minority Entrepreneurship in the UK

In this opinion piece, Stephen Pegge, Managing Director, Commercial Finance at UK Finance, looks at the importance of supporting entrepreneurs from ethnic minority backgrounds in the UK.

From a caterer in Manchester to a marketing agency in Southampton, small businesses are an integral part of our economy. At their heart are entrepreneurs, many of which are from an ethnic minority, whose talents, ambition and hard work help the UK thrive.

Collectively ethnic minority businesses contribute £25 billion in gross value added to the UK’s economy, according to the Federation of Small Business. At the same time their international connections also clearly benefit trade. But these sums could be even higher if all entrepreneurs received greater help and support, enabling them to start, scale, trade and invest.

For every business, access to finance is essential. Recent research commissioned by UK Finance found that ethnic minority SMEs are on average very ambitious, report high growth rates and are more innovative than others.

However, ethnic minority entrepreneurs are also more likely to see barriers to running their business, with long-held perceptions that they will find it hard to obtain commercial finance and a lack of trust in providers meaning they often simply don’t apply.

UK Finance has published a new report looking at the current state of ethnic minority entrepreneurship in the UK and the role the financial services sector plays in supporting businesses’ needs.

From my experience of nearly four decades in the industry, there has been considerable progress made in how lenders support entrepreneurs of all backgrounds.

However, there is more to be done and the report finds three key areas where lenders can have the greatest impact in providing this support, with examples of the schemes and programmes already underway.

Three key areas

Stephen Pegge, Managing Director, Commercial Finance at UK Finance

Stephen Pegge

First is tackling issues of trust and discouragement. Ongoing industry-led programmes that promote stronger relationships and communication between banks and ethnic minority businesses are helping in this regard and it’s important to continue focusing on these relationships.

Second is providing business support and access to finance. Further assistance can be given as many entrepreneurs struggle to tap into the vital networks, contacts and information that are key to building their businesses. Banks and financial providers are well placed to provide the infrastructure to break down these barriers through activities such as tailored mentoring services, online resource hubs and national events that showcase entrepreneurs from a range of backgrounds.

Third is internal change. As well as promoting new initiatives and offering practical support for ethnic minority businesses, the industry also needs to lead by example through internal programmes that promote cultural and diversity awareness.

As the UK economy faces the challenges of building new trading relationships, recovery from Covid-19, the transition to net-zero and digitisation, never has it been more important to embrace the widest range of opportunities and diversity of talent that we have. The banking and finance industry is committed to playing a central part in ensuring ethnic minority entrepreneurs receive the full support they need to help their businesses flourish.