A new study from the Federation of Small Businesses (FSB) has indicated that the UK’s army of small firms will face a funding shortfall of around £3.6 billion by 2021 as a result of the UK’s withdrawal from the EU.
According to the FSB’s data, around eight out of 10 SMEs have tried to access business support services over the past 12 months.
Much of these applications for official funding have been made to the EU, which will have provided nearly £4 billion of dedicated small business support between 2014 and 2020.
After this date there are concerns that no further assistance or reduced assistance will be provided as the UK government has not yet budgeted for a regional development fund beyond 2021.
This is particularly worrying for certain areas of the UK that are more reliant on funding from the EU. For example, businesses in Northern Ireland (32 per cent), Wales (26 per cent) and Yorkshire (25 per cent) were most likely to apply for EU-funded schemes, according to the research.
Of those that apply 89 per cent are looking to grow the business by 20 per cent or more, while more than two thirds (68 per cent) said that the funding had a positive impact on their company.
Within the report, the FSB said: “EU funds provide a vital support structure for comparatively disadvantaged areas of the UK, such as Wales, the north east and Cornwall.”
Responding to the findings, Mike Cherry, National Chair of the FSB, said: “Small businesses across the country are staring into a business support black hole from 2021. This is a particularly pressing issue for the many small firms with growth ambitions and those in less economically developed regions.”
However, the report also found that many more businesses were unaware of the opportunities on offer, with 44 per cent of small businesses having no or little knowledge of the money available to them – suggesting there may be a greater appetite for business support out there.
Mike Cherry added: “Brexit marks an unprecedented opportunity for fundamental reform. LEPs (local enterprise partnerships) and Growth Hubs must be empowered to tailor and simplify support according to local requirements. Ensuring that all small firms are aware of business support schemes should be a top priority.
“The new government must prioritise the development of a Growth Fund for England pre-Brexit or risk a slowdown in the economy.”