Lost EU funding could create business support “black hole” by 2021
FSB calls on government to create a streamlined 'Growth Fund for England' before EU's dedicated support for UK small firms ends in 2020
The UK is at risk of a post-Brexit economic slump if it doesn’t replace billion of pounds worth of European Union business support, according to the latest report from the Federation of Small Businesses (FSB).
The Reformed Business Funding: What small firms want from Brexit report claims that when the EU’s dedicated £3.6bn fund to develop the competitiveness of UK small businesses ends in 2020, there is currently no regional equivalent at the national level beyond 2021.
78% of small firms surveyed had sought business support services in the last year, with those located in Yorkshire (25%), the North East (22%) and North West (18%) most likely to submit applications for EU-funded schemes.
Of those that have applied, 68% said EU funding had a positive impact on their business and 64% on their local area – suggesting other businesses in the area indirectly benefit from wider economic growth.
Those who sought EU funding were more likely to have clear growth ambitions, with 89% of businesses aiming to grow by 20% or more applying for support compared to 65% of those who intended to stay the same size.
However, 59% of EU funding applicants expressed frustration with the amount of information required, 47% with the length of the application process and 44% with the need to meet “excessive reporting requirements” after funds were granted. Just 12% said the application process was straightforward.
The report also uncovered a lack of engagement with EU funding programmes as 44% of firms that had not made an application said they were unaware of the opportunity to do so. 34% of those who had, discovered the opportunity through existing business contacts.
As a result of its findings, the FSB has called on the government to create a streamlined ‘Growth Fund for England’ before the Brexit process is completed, bringing together a domestic replacement for EU funding and the Single Local Growth Fund.
Mike Cherry, FSB National Chairman, 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.
“Brexit marks an unprecedented opportunity for fundamental reform. LEPs 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.
“We can’t have an environment where small businesses perceive personal contacts or administrative skills as more important to successful applications than genuine need.”