Ethnically diverse SME leaders twice as likely to be turned down for business funding

Ethnically diverse SME leaders twice as likely to be turned down for business funding 

Business in the Community (BITC) has today published new research which found that Black, Asian, Mixed Race, and other ethnically diverse small and medium enterprise (SME) leaders are twice as likely to be turned down for business finance or funding. 

The research found that one in 10 ethnically diverse SME leaders were turned down for business funding from a bank, venture capitalist, or investor in the last 18 months. For White SME leaders the figure is as low as one in 20. 

The research, conducted by YouGov for BITC’s ‘Leadership, Employees, and Procurement’ insights report, [2] surveyed more than 5,000 UK businesses of all sizes and sectors.  

The research comes as government data shows that only 7% of SMEs are ethnically diverse led.[3]  

Sandra Kerr, Race Equality Director at Business in the Community, said: 

“Diversifying supply chains should be a top priority for all businesses, as evidence shows that ethnically diverse SME leaders are almost two times less likely to get business funding than White SME leaders. Supplier diversity has been a key pillar for action in our Race campaign since the campaign was founded in 1995, and the commitment to include ethnically diverse-led businesses in the supply chain was added to the Race at Work Charter in 2021 after BITC insights found that this was an area in need of a great deal of improvement in order to achieve a truly equal and equitable workforce. While UK employers are clearly moving in the right direction, our ‘Leadership, Employees, and Procurement’ insights report sheds light on how much work is yet to be done in this area.” 

Richard Iferenta, Partner and Vice Chair at KPMG, and Chair of BITC’s Race Leadership Team, said:  

“Diversifying the supply chain is not just the right thing to do; it can also unlock financial and business benefits. To have a workforce that is truly representative of the wider UK population, it is vital that we first make sure this is not just reflected in our own organisations, but also throughout our supply chains.” 

The research also found that a third of large businesses do not have objectives to increase the diversity and inclusion of their supply chains, while only half of large businesses do have these targets in place. In addition, a quarter of businesses do not collect any data on ethnicity at any stage of the procurement process. 

BITC’s Race at Work Charter asks businesses to make a public commitment to improving equality of opportunity for ethnically diverse individuals in the workplace.[4] The Charter has more than 1,100 signatories across the UK, and one of its seven commitments is to include Black, Asian, Mixed Race, and other ethnically diverse-led enterprise owners in supply chains. The ‘Leadership, Employees, and Procurement’ report encourages businesses to diversify their supply chains by: 

  • Supporting diverse suppliers to access opportunities within their supply chains. 
  • Tracking the diversity of supply chains and setting targets for spending on diverse organisations in the supply chain. 
  • Supporting small businesses and empowering their founders to break down barriers to growth. 

ENDS 

Notes to editor 

1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 5091 adults. Fieldwork was undertaken between 26th March – 17th April 2024. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+). 

      2. Read the full ‘Leadership, Employees, and Procurement’ insights report here. 

      3. Department for Business & Trade: Longitudinal Small Business Survey: SME Employers (businesses with 1 to 249 employees) – UK, 2023 – GOV.UK (www.gov.uk) 

      4. Find out more about BITC’s Race campaign and the Race at Work Charter here. 

      For further information, please contact Polly Dacam, Press Officer, on 020 7566 6638.