First Generation Family SMEs Currently Contribute Around £180 Billion To The Economy Annually, According To Barclays

Family businesses will contribute £218 billion to the UK economy by 2018, according to Barclays.

This number currently stands at £180 billion, but the bank believes a recent expansion in the number of SMEs in the UK will boost the figure by more than £30 billion in four years.

According to Barclays, the overall value of family-owned small businesses is greater than the manufacturing, wholesale or retail sectors' contributions, showing how important it is that viable funding routes are available to SMEs looking to expand.

Rebecca McNeil, director of business lending and enterprise at Barclays Business, said: "Family SMEs play a powerful role in the UK economy and one that is set to increase if they have the right access to support and funding.

"We currently work with over 130,000 family run businesses and have built up a great deal of expertise in guiding them through their growth phases."

But despite Ms McNeil's claims, many SMEs argue their requests for funding are falling on deaf ears at many high street retail banks.

Although Barclays saw an eight per cent increase in term lending to family companies in 2013, a recent Experian report found that a quarter of SMEs have had to dip into their own bank accounts to keep their business afloat.

Ade Potts, managing director Experian's SME branch, said: "Although it might initially seem like using personal funds for business purposes is the easiest route, it can affect personal credit records."

Statistics like these, as well as pressure from lobbying groups and MPs, have forced the financial sector to release more funding to SMEs, but progress has been slow, something Barclays is keen to rectify.

Ms McNeil confirmed the company's commitment to helping family firms to expand and create jobs.

Barclays also revealed the estimated economic contribution of family companies in each sector, with financial services the strongest at £39 billion, followed by hotels and restaurants at £25 billion.

Expert Opinion

It is interesting to see the hugely important role that family-run businesses are playing in the ongoing recovery being seen across the economy. Such organisations are generally seen as quite traditional or in some ways an old-fashioned concept, but there clearly remains much appetite among entrepreneurs to make their operations a family affair. <br/> <br/>"While this is very welcome, we would urge such organisations to not ignore the importance of having access to the right advice from external parties. This is particularly important when it comes to legal matters and impartial support on issues from employment law to vital regulatory compliance. <br/> <br/>"Having the right support available is key if such SMEs are going to realise both their ambitions and their true potential." Steven Beahan - Partner