Research has shown that fast-growing, innovative businesses are responsible for the lion's share of economic growth.
But it is hard to expand a business without access to finance. And despite intense negotiations between the government and the banks, for most of Britain's small and medium-sized businesses, the credit crunch is still in full effect.
NESTA has joined forces with the Daily Telegraph and Sam Gyimah MP to look at how new ways of financing small businesses can help. We will be working with entrepreneurs, businesses and financiers to identify new ways to get finance flowing to the best companies.
If you run a small or medium-sized business and would like to be a part of this, drop us an email to firstname.lastname@example.org, and we'll send you updates and let you know about opportunities to get involved.
We would also value your views on what can be done to help get finance flowing to small businesses, and any examples you've encountered of existing or new businesses going out of their way to help finance small and medium businesses.
We're kicking off the project with a meeting for businesspeople at the Daily Telegraph's offices from 08:30 to 10:00 on Tuesday 19 July. If you would like to attend, please register here.
We will be following this up with a programme of research and discussions, looking at interesting developments in the UK and beyond and working with entrepreneurs and experts to identify proposals for how the problem can be fixed.
The Bank of England's latest quarterly review of small business lending confirms that there is a problem (p7):
"The data [from a regular survey by the Department for Business, Innovation and Skills] indicate that the annual rate of growth in lending to SMEs has been negative since late 2009 and fell to -3% in February 2011. Data published by the British Bankers' Association indicate that the growth rate of lending to small businesses, defined as turnover up to £1 million, stood at -6% in December 2010, the latest available month for which these data are available. Annual lending growth to small businesses on this definition has been more negative than for the SME segment since June 2010."
But there are glimmers of hope. From new banks entering the UK market, such as Sweden's Handelsbanken, to start-ups like Funding Circle, new ways of financing are emerging, focusing on the needs of entrepreneurs.
In the last three years, financial innovation has had a justifiably bad reputation - too often, it has served the interests of bankers rather than customers, and society has picked up the tab. This is an opportunity put innovation in finance to work for good instead.
To get involved, or tell us what you think, please email us at drop us an email to email@example.com.
A discussion about innovative ways to provide credit to small and medium-sized businesses
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How high-growth innovative businesses generate prosperity and jobs.
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