One of its tasks will be to investigate why ethnic minority businesses face additional barriers in access to finance, as highlighted by a recent survey commissioned by the Department for Trade & Industry (DTI).
Survey findings include:
Ethnic minority-owned businesses pay higher bank loan charges than White-owned businesses, on average;
The gap between the amounts of business finance sought and the amounts agreed is significantly greater for Black African and Pakistani-owned businesses;
Black African and Black Caribbean-owned businesses are much more likely than Indian, Pakistani and White-owned businesses, to be rejected for loans outright;
Black African and Black Caribbean owned businesses are significantly more likely to feel discouraged from applying for finance than Indian, Pakistani and White-owned businesses;
The survey found that some of these discrepancies can be explained by standard business risk factors and financial relationships (for example, the age of businesses and how much collateral businesses can offer against a loan, as well their financial track records).
However, it concludes that these do not fully explain the differences, particularly with regard to the margins paid on loans, and gaps in financing.
Minister for Industry and Regions Margaret Hodge said: “Why is it harder and costlier for some ethnic minority firms to get a loan than others? I have asked the Task Force to investigate this and come back with recommendations on ways to address this issue.
“Over the next two years the new Task Force will propose ways to encourage more ethnic minority participation in enterprise. It will also reach out to potential entrepreneurs in under-represented BME groups, including ethnic minority women, looking to help remove the barriers to doing business which face them.”
Adeeba Malik MBE will co-chair the Task Force alongside Tom Riordan, Chief Executive at Yorkshire Regional Development Agency Yorkshire Forward.
Adeeba Malik said: “I welcome the opportunity to contribute to this agenda and I am delighted Yorkshire Forward has agreed to lead in supporting the task force. Ethnic minority businesses make a significant contribution to GDP so it is important they are supported and encouraged to flourish.”
Tom Riordan said: “If the English regions are to achieve their economic potential, then we need to create the conditions for minority ethnic businesses to grow and prosper.
“To do so, we need to make sure that they have access to the same levels of support as any other business. I intend to make sure that the Task Force has a real impact on the delivery of business support across England”.
There are an estimated 300,000 BME-run small businesses in the UK, contributing an estimated £20 billion per year to the UK economy. However, some BME groups are under-represented in enterprise including black Africans, black Caribbeans and Bangladeshis, while there are relatively few women in business in all groups.
Yorkshire Forward will announce further details about the membership and projected work of the Task Force in the autumn.