With Innovate UK narrowing its funding toward high-growth businesses and the FCA reviewing whether lending rules are restricting SME finance, there’s a growing gap between policy direction and what most UK businesses are experiencing on the ground.
Aman Parmar, Head of Marketing at BizSpace, which supports British SMEs with flexible workspace, offers insight into the growing pressure on the UK’s ‘missing middle’ of established SMEs.
He said: “What we’re seeing right now is a clear mismatch between where support is being directed and what most SMEs actually need. Policy is increasingly focused on backing high-growth businesses, but the reality is that the majority are dealing with day-to-day pressures just to remain stable and grow sustainably.
“This approach is being driven from the top down, with the government prioritising productivity and scale and bodies targeting funding accordingly. The intention is to maximise economic return, but in practice, it concentrates support on a small group of high-growth firms, leaving much of the wider SME base with less access. Tighter conditions around finance are making it harder still for many businesses to secure the support they need, widening the gap between policy ambition and everyday reality.”
Innovate UK is increasingly focusing on sectors like AI and advanced manufacturing, with broader grant access being scaled back.
He added: “It’s not just about availability: it’s the cost, the complexity and the risk. That’s leading a lot of businesses to hold back on investment.”
