The onset of the global financial crisis had a transformative impact on the UK’s business lending environment, and while an initial credit crunch from mainstream lenders restricted SME access to growth capital, alternative finance opportunities quickly rose to prominence. Connecting businesses in need of investment with investors seeking to support the nation’s bustling community of scale-ups, alternative finance offered the timely support necessary for UK SMEs to realise their full growth potential. Central to this have been tax-efficient investment opportunities, and in particular, the Enterprise Investment Scheme (EIS).
Nearly a decade on from the financial crisis, a significant proportion of SMEs are still struggling to access finance from banks – the British Business Bank estimates that each year nearly 100,000 start-up and scaling businesses have their formal applications for loans rejected by the main British lenders. This equates to a staggering £4 billion loss in potential business growth capital. Considering there are more than 5.5 million companies in the UK, 99% of which constitute as SMEs, there’s no denying the fundamental role of small firms as key instigators of employment, productivity and national growth.
Tax-efficient investment schemes have proven paramount in fuelling the scale-up of SMEs with immense growth potential, with EIS linking investors to businesses through a second tier incentive of targeted tax reliefs. To celebrate the role of these schemes in fuelling SME growth, IW Capital has released a new report titled EIS in 2017: Supporting the Scale-Up of Business Britain. Charting the performance of tax-efficient investment vehicles over the past decade, and in particular, the performance of EIS over the past 12 months in supporting scaling businesses, the report reaffirms the importance of EIS in supporting the next generation of UK businesses.
You can download the report by registering as a member of Access 42, here.