A new report from the British Business Bank has found that small businesses are still struggling to upscale. Similar sentiment was also uncovered in a poll commissioned by The Telegraph, which revealed that 60% of businesses believe the scale-up phase is the most difficult part of running a company. This is compared to 19% who said the start-up phase is the most troublesome.
The number of businesses citing the upscale process as a major obstacle in their progression is unsurprising. Expansion can be a daunting hurdle for any business; however, this is a particularly pertinent issue for early-stage companies that are looking for growth capital.
Without access to finance, it can be impossible for some promising British companies to take the next step in their growth strategy. And as rejection rates for small businesses seeking traditional bank loans stand at around 50%, other funding options are needed.
Alternative finance has played an important role in plugging the funding gap experienced by businesses trying to upscale. In particular, tax-efficient investment schemes have created additional funding avenues for businesses hoping to expand and develop their services.
The Enterprise Investment Scheme (EIS) is a prime example of this. Revised figures from HM Revenue & Customs show that funds raised through EIS over the 2013/14 tax year reached £1.5 billion. Significantly, the revised data also shows that companies using EIS for the first time were able to raise £872 million, an increase of £296 million from the 2012/13 tax year.
As EIS continues to evolve and develop, this dictates the industries that qualify for investments under the scheme. In order to create greater investor awareness of the top performing industries to watch in 2016 – all of which are eligible for investment through EIS – IW Capital is soon to launch its High-Growth 16 report.
This report identifies the nation’s leading high-growth industries and lists some of the key companies revolutionising their respective sectors.
We look forward to updating you on our High-Growth 16 report in the coming weeks.