YORKSHIRE’s small and medium-sized enterprises are feeling optimistic as they prepare for life after Brexit, although access to funding has become a critical hurdle for many, according to a leading law firm.
Gavin Maddison, corporate partner at Ward Hadaway in Leeds, said that access to funding to help small and medium sized enterprises (SMEs) grow is more important than ever – nearly a year after Article 50 was triggered.
His comments come as the build-up continues to the Yorkshire Fastest 50, the annual run-down of the fastest-growing privately owned companies in Yorkshire which Ward Hadaway sponsors and organises in association with The Yorkshire Post.
According to the Federation of Small Businesses, the European Investment Fund has provided almost £500m per year to support British SMEs.
Many Yorkshire businesses could lose access to this funding.
Mr Maddison said they need to act now to look at alternative sources to sustain further growth.
He said: “Optimism and entrepreneurial spirit go a long way for SMEs, but access to investment and funding will be a critical hurdle for many in 2018.
“Business owners need to assess how dependent they are on EU funds or loans and gauge the impact on their business.
“Having spoken to business leaders across Yorkshire, there is a general sense of acceptance that Brexit is happening, but the focus now is on building their businesses and dealing with the consequences of it as they arise.”
Mr Maddison added that anticipating the potential impact of Brexit would give small businesses the time to consider additional funding sources.
It would also give them a clearer picture of what Brexit will mean for future financing.
He added: “Companies looking to expand, whether they want to access new markets, increase production capacity or acquire competitors, invariably need to look for external finance to help them realise their ambitions.
“While mainstream banks continue to be the key players in terms of the overall volume of small business lending, there are a range of different routes to secure additional capital, and the amount of finance sourced by SMEs from the alternative finance market has increased in recent years.
“City councils and organisations offer loans and grants to support businesses through schemes such as the Regional Growth Fund. There are also other funding options available to help accelerate growth for the region’s smaller businesses.
“For example, at Ward Hadaway, we have been involved in advising companies on investments involving the Northern Powerhouse Investment Fund and Business Growth Fund in the SME sector.
“Private equity is also a realistic option for companies such as those found in the Yorkshire Fastest 50, as are stock market flotations.”
Mark Smith, a banking and finance partner at Ward Hadaway in Leeds, said the banks will continue to play a key role as the UK looks to redefine how small businesses are provided with the resources they need to grow.
He said: “Business data is driving the decision-making process and information from Companies House and business credit rating agencies such as Experian is being used to set loan terms, so it’s worth remembering that poor scores can affect funding applications and limit entrepreneurial growth.”
There has also been an increase in peer-to-peer and angel funding.
The Yorkshire Fastest 50 2018 takes place at Aspire in Leeds on Friday, March 16 with guest speaker Sir Keir Starmer, the Shadow Secretary of State for Exiting the European Union.
The event, which has been running in Yorkshire since 2011, celebrates the fast growing firms that are bringing jobs and investment to the region.