The lack of financial support for ethnic minority businesses is a lost opportunity, costing the British economy £75 billion a year, says a new report from the Centre for Ethnic Minority Entrepreneurship Research and NatWest.
The same report outlines 10 steps to transform support for ethnic minority businesses by expanding policy agendas for inclusive growth, productivity and innovation.
QU, a consultancy for minority and women-owned businesses, says the report highlights critical imbalances that prevent the creation of a more inclusive business environment. QU’s co-founder Marla Ubhi acknowledges that Britain’s inclusive business practices have taken us forward over the past two decades. “However, more needs to be done to improve the financial literacy of potential ethnic minority entrepreneurs and act on their ideas and proposals for start-up and growth.”
To go further
To better understand the adversity that ethnic minorities face in developing their businesses, QU also commissioned a landmark national study on the critical lack of diversity in support and access to growth capital.
The study results show that there is still a long way to go. They reveal that 57% and 48% of Black and Asian Britons, respectively, are looking to improve their lifestyle by starting a business, compared to only 34% of White Britons surveyed. In addition, 56% and 49% of Black and Asian Britons sought finance to expand their businesses, but the Guardian reports that White-owned businesses are twice as likely to get a loan as Black-owned businesses.
According to another study by the British Business Bank, this lack of access to finance has led 49% of ethnic minority entrepreneurs to stop working on their business idea, preventing a wave of entrepreneurs from entering the market. According to QU, many factors that define lending outcomes are based on a lack of financial literacy rather than ethnicity.
To address this, QU focuses on informing and guiding ethnic minority businesses to the right places to find capital. It also involves simple actions that will increase the likelihood of obtaining finance, such as improving credit assessment and designing financial models.
“We designed QU as a personal and business branding programme that inspires confidence in everyone and enables our community of like-minded entrepreneurs to break through barriers,” explains Marla Ubhi.