Finance barriers hold back creative organisations with growth ambitions - new report

Creative industries organisations are more likely to be targeting future growth than businesses in general, but are also more likely to report barriers in securing finance to grow, a new report documents.

The report, Unleashing Creativity: Fixing the finance gap in the creative industries, is based on a survey of 896 business from across creative sub-sectors and all parts of the UK. This work was conceived and initiated by Creative UK and undertaken in partnership with the Creative Industries Policy & Evidence Centre (Creative PEC), and funded by YouTube, with support from the Creative Industries Council and Bloomberg Philanthropies.

Its key findings include that when benchmarked against the SME Finance Monitor 72 per cent of creative businesses in 2023 anticipated growth, compared to an average of 59 per cent among all types of businesses.

However, creative businesses were also more than four times more likely than other businesses to say that accessing the right type of finance was a barrier they needed to overcome to realise their ambitions to grow.

Thirty per cent of creative businesses said they lacked the knowledge about finance to make informed decisions about their businesses and 27 per cent did not know where to go for information.

In addition, 41 per cent of creative businesses said they lacked the necessary financial and managerial skills to grow their business, and there was evidence that these challenges were not limited to the smallest organisations. For example, 22 per cent of businesses with 51-100 employees said they lacked knowledge about their financial options.

The report presents further evidence that creative organisations see a mismatch between their needs and available financial products.

More positively, it presents data suggesting that businesses located in a creative cluster or micro-cluster (defined as streets, neighbourhoods or towns with a disproportionate amount of creative industries activity), were 15 per cent more likely than the average of creative businesses to apply for finance and 14 per cent less likely to report lack of knowledge about their financing choices.

However, there were also some worrying data points relating to equality, diversity and inclusion. Female and ethnic minority-led creative organisations were more likely to report needing capital and to face more barriers to access. Organisations with ethnic minority-led leadership were more likely to view access to finance as a barrier, and were 17 per cent more likely to have to put their own capital into the business.

Launching the report, Caroline Norbury OBE, Chief Executive of Creative UK, said: “This landmark report confirms what those of us who work with creative businesses have long known: the sector is hungry for growth but starved of strategic investment. Already growing over 1.5 times faster than other sectors in real terms, imagine what could be achieved if the barriers to suitable financing were broken down."

Hasan Bakhshi, Director of the Creative Industries Policy and Evidence Centre (PEC), said: "We find shortcomings in both the supply of finance – with investors and lenders all too often ill-informed on the economics of the sector – and the demand for finance – with too many creative businesses not investment-ready, and even when they are, not being fully aware of their options.

"Addressing these problems therefore needs system-wide policy changes if the Government is to follow through on its commitment to harness the creative industries’ growth potential.”

For more detail on the report and information on a suggested new investment framework, called Creative Economy Capital, launched by Creative UK and details about the organisation's investment for growth summit on March 4, visit its website.

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