The future of funding for small business support

Enterprise Nation hosted an event in Birmingham in partnership with Mastercard as part of the Strive programme. The event brought together small business owners, local elected representatives, and policymakers from central and local government to discuss the future of small business support funding. 

Participants were welcomed by Enterprise Nation founder Emma Jones, before a video message in support of the event from small business minister Kevin Hollinrake was played to the room. 

Next up was a keynote address from Cllr Beverly Nielsen, executive director of the Institute for Design, Economic Acceleration & Sustainability at Birmingham City University. She highlighted geopolitical developments that are disrupting businesses, such as ongoing global conflicts and the recent disruption in the Red Sea, which has affected supply chains. 

She emphasised the vital role of SMEs in the UK economy, accounting for two-thirds of private sector employment, contributing over 50% of GDP, creating over half of new jobs, and generating 13 times more patents than large companies, driving innovation. 

Focusing on the West Midlands, Nielsen said she foresees high turnover in high-tech manufacturing and construction, which pay above-average wages and generate significant R&D investment. 

However, Nielsen raised concerns about access to finance for SMEs, with only two in five finding it easy. This is exacerbated by the impending end of the Shared Prosperity Fund (SPF) in March 2025, creating a 'cliff edge' for many businesses. In areas such as Worcestershire, businesses are uncertain about post-SPF support, as Local Enterprise Partnerships have been abandoned, leaving SMEs without the support they need. 

On the future of small business funding support  

The audience then heard insights from a panel including Daniel Evans, CEO of Birmingham Enterprise Community (BEC), Dan Carins, policy manager for business at the West Midlands Combined Authority (WMCA); Matt Williams, senior partnerships manager at Enterprise Nation, and Richard Jeffery, national director of the Growth Company.

With the Shared Prosperity Fund due to end in March 2025, Dan Carins reflected on business support funding across the West Midlands Combined Authority area. He noted that significant public funding has been allocated to investment readiness programmes, where private companies support businesses seeking finance.

In addition, the WMCA is working with the Department for Business and Trade to help businesses export through direct support from the department's international trade advisers. 

Richard Jeffery highlighted the effectiveness of the national growth hub network in England, although the impact varies regionally. He emphasised the need to proactively communicate that investment in business support not only creates jobs, but better, higher paid jobs - a narrative that has yet to be communicated regionally.

Jeffery argued that solving major policy challenges, such as environmental issues, requires bringing the SME community on board and positioning a thriving SME sector as part of the solution. 

Daniel Evans emphasised that businesses prefer easily accessible support to regional or political structures. He explained that long-term stability is needed, regardless of which political party is in power. Evans added that the BEC provides free support to small businesses through business mentors and offering access to space through the provision of co-working spaces.    

Matt Williams emphasised the differing views of local authorities on the use of Shared Prosperity Fund money. He highlighted the growing panic over the March 2025 deadline, as contingency plans need to be implemented well in advance to avoid disruptions, such as the transition from European to UK business support funding.

Williams added that many major private sector brands have business support schemes for start-ups, which is to be welcomed alongside public funding. 

Looking to the future, Dan Carins explained that the WMCA is working towards the funding of investment zones in the West Midlands, which will include business support for SMEs and capital funding for businesses in these zones, with a target launch date of 2025.

Its long-term, ambitious goal is to secure a comprehensive funding settlement from the Treasury, providing certainty to businesses through a negotiated regional funding needs agreement that meets government assessment and reporting standards. 

Richard Jeffery expressed optimism about devolution's future, citing cross-party consensus on its merits. While acknowledging convincing some stakeholders further, he believes regions are uniting to make devolution work, aided by research outlining effective strategies. Jeffery noted convincing local and national policymakers devolution can succeed is key. 

Ultimately, the critical importance of accessible, well-funded, and coordinated business support systems were emphasised as being required to help foster a thriving SME sector. 

Alternative funding options and role of fintech innovation 

The event continued with insights from a panel including Jim Shirley, founder of FundingHero; Jof Walters, founder of Greater Things; Pam Sheemar, regional enterprise director at NatWest; Henry Nicholson, CEO of The Rebel School, and Hilary Smyth-Allen, executive director of SuperTech. 

Pam Sheemar highlighted NatWest's Accelerator programme, which has directly supported small businesses since 2016, helping 35,000 entrepreneurs and facilitating £134m of funding, with 45% of new jobs created by female founders.

It provides 18 months of fully funded collaborative support, mentoring, commercial advice and signposting to private sector resources and credit advice - independent of funding from the Shared Prosperity Fund. 

Hilary Smyth-Allen noted that small businesses are increasingly turning to challenger banks for speed and agility, driven by their embrace of fintech. While Open Finance is not yet a widely-used resource, recent Treasury investment in the Centre for Finance, Innovation and Technology signals progress. Smyth-Allen highlighted Open Finance's potential to dramatically speed up funding decisions, with a Treasury demo showing that 25% of grant applications were automatically approved using HSBC data. 

However, Smyth-Allen and Sheemar acknowledged a cultural barrier in the West Midlands - a pride in not borrowing from institutions and growing businesses independently. Sheemar suggested that larger banks should partner with FinTech’s to rapidly scale open finance. 

Jof Walters highlighted artificial intelligence (AI) as a key enabler for Open Banking/Finance, providing new opportunities to systematically standardise processes and automate labour-intensive tasks such as business planning and due diligence.

With AI, investment costs could be reduced to retail banking levels, opening up venture capital to SMEs. While acknowledging the initial fears of AI, as with the internet, Walters stressed the need to embrace its transformative power. 

Henry Nicholson and Jim Shirley offered perspectives on the relationship between AI and human business support. Nicholson argued that AI could outperform human advisors in assessing business viability through objective, evidence-based analysis, but could not replace the empathetic human element.

Shirley saw AI as an enabler, enabling founders to create AI-driven plans, complemented by personalised human advice. Hilary Smyth-Allen added that widespread adoption depends on the involvement of HM Revenue & Customs (HMRC), catalysing a cultural and political shift towards integrating AI into tax systems. 

Turning to the post-Shared Prosperity Fund, Shirley emphasised filling the looming funding gap, noting that only 0.2% of the 305,000 active businesses in the West Midlands are high growth. Creating a healthier lending ecosystem could double this percentage and generate significant economic growth. 

Small business and adviser perspectives  

Emma Jones introduced Tony Seaton FCA, client director at Jerroms, and Debbie Assinder, director at Rodborough Consultancy, before Natasha Jamal, vice president of social impact at Mastercard's Center for Inclusive Growth, gave the closing remarks. 

Debbie Assinder raised concerns about the current regional climate for raising finance, citing the difficulties businesses face in obtaining funding and work visas. 

She highlighted the potential £250bn boost to the UK economy if more women embraced entrepreneurship. However, Assinder noted that existing support, such as start-up loans, can be too generic and fail to meet the specific needs of businesses - reflecting wider government constraints. For example, Local Enterprise Partnerships couldn't list paid-for services that would benefit businesses willing to invest in bespoke training. 

On AI, Assinder raised concerns about potential gender bias encoded in algorithms trained on internet data that is biased against women. As AI grows in processes such as Open Finance funding decisions, algorithm developers may unwittingly perpetuate biases that impact female founders. 

Tony Seaton emphasised advisers working in larger groups to improve SME advice. He drew a distinction between accountants who focus solely on number crunching and those who offer holistic commercial strategy.

Seaton lamented the underdeveloped business angel investing network in the West Midlands compared to London and Manchester. As the Shared Prosperity Fund draws to a close, he noted the continuing confusion for businesses following recent overhauls of the support system, including the disappearance of local Growth Hubs - undermining continuity and a single point of contact. 

Finally, Natasha Jamal stressed the need to simplify access to support for entrepreneurs, regardless of the underlying structures or funding sources. The goal should be to consolidate resources across ecosystems into one platform for entrepreneurs. Technology enables targeted, data-driven support, but requires vigilance against inherent biases and inclusive design. 

Jamal highlighted the critical role of the private sector in supporting business support organisations in the face of fluctuating government funding. While public bodies provide funding on a large scale, the private sector drives innovation in support provision. Ultimately, Jamal called for private organisations to come together to deliver holistic, rather than siloed, business support. 

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