Breaking Barriers to SME Growth: Oxford Innovation Advice calls for policy shift from finance supply to financial capability
The latest insight report from Oxford Innovation Advice, “Breaking Barriers: Unlocking Financial Access for SMEs,” warns that government and regional strategies to boost SME finance must evolve beyond increasing the supply of funding, and instead focus on strengthening financial management capability and literacy among small and medium businesses across the UK.
The report, based on insights from supporting more than 34,000 SMEs nationwide since 2017helping them raise £227 million in finance, reveals that poor financial skills – not the lack of finance options available – is now one of the biggest barriers to SME growth.
While initiatives like the Government’s Backing Your Business strategy have improved funding availability, Oxford Innovation Advice argues that supply alone is not the answer. The majority of SMEs struggle to navigate the growing complexity of finance markets and lack the skills to present strong investment cases.
“The finance landscape continues to grow in complexity, and many SMEs are struggling to understand it,” said Andrew Finley, report author and Commercial Director at Oxford Innovation Advice.
“We’ve reached a tipping point where improving financial literacy, forecasting and cashflow skills is a vital key to unlocking growth — not simply pumping more money into the system.”
Report key findings:
- Finance supply is no longer the main constraint: Approval rates for SME loans have fallen, yet alternative lenders and equity options have expanded. Many firms fail to access these because they lack understanding of the opportunities, confidence and capability.
- Financial literacy gap: Over half of SMEs do not produce monthly management accounts, and many lack even basic cashflow forecasting.
- Over-reliance on main banks: 50% of SMEs approach only their primary bank, and rejection often leads to abandoned growth plans.
- Missed opportunities for early-stage equity: Innovative start-ups frequently collapse once founder funds are exhausted, unable to bridge the gap to seed investment.
Policy Implications
Oxford Innovation Advice is urging central and local government departments, including combined authorities and county councils, to embed Access to Finance support within broader business support ecosystems – focusing on skills, not just funding.
The report recommends that;
- Access to Finance programmes include hands-on financial management support, not just brokerage to lenders.
- Pre-seed investment funds are established to bridge early-stage equity gaps.
- Business support providers deliver structured, accredited financial capability training to improve SME readiness for growth and investment.
- Government programmes reorient from a “supply-side” approach to one that develops “demand readiness”, ensuring SMEs can identify, secure, and manage appropriate finance.
“We’ve seen first-hand how focused financial skills training can transform a business’s resilience and confidence. When SMEs understand their margins, pricing, and cashflow, they don’t just raise finance more effectively — they become more competitive, profitable and sustainable.” said Finley.
A call to policymakers
Oxford Innovation Advice is calling on policymakers to consider Access to Finance not as a standalone intervention, but as a core enabler of growth, one that must be integrated into every local business support strategy.
“Strengthening SME financial capability is one of the most impactful steps policymakers can take to build long-term economic resilience,” said Jane Galsworthy, Managing Director of Oxford Innovation Advice.
“The businesses we support not only raise more finance – they grow faster, create better jobs, and strengthen their local economies.”
About Oxford Innovation Advice
For over three decades, Oxford Innovation Advice has helped ambitious businesses to innovate, grow, and secure the finance they need to thrive. The organisation has supported over 34,000 SMEs to innovate, adopt digital technologies and access growth finance, delivering more than £227 million in secured investment since 2017.
Oxford Innovation Advice designs and delivers business support programmes across innovation, growth, finance and manufacturing, creating long-term economic impact in communities across the UK.
Click here to read the full report: Insight-report_Unlocking-financial-access-for-SMEs-Nov25.pdf
