Comment on MoD supporting defence contracts but adaptable SME lending the priority
Commenting on support for SMEs with access to defence contracts but adaptable lending strategies should be priority, Douglas Grant, Group CEO of Manx Financial Group, said: “We welcome the Ministry of Defence’s (MoD) commitment to enhancing SME access to defence contracts which will appeal to around 12,000 UK businesses and represents a crucial step in strengthening the UK’s long term national security, supply chains and economic resilience. However, this investment comes at a time when businesses are grappling with rising inflation, squeezed margins, and mounting cost pressures. As recession risks loom, UK SMEs need more than just procurement opportunities, they also require adaptable lending strategies to sustain growth and competitiveness. With traditional lenders typically classing all defence investments as non-compliant with the established ESG requirements, it is vital that alternative lending sources are made available immediately to help UK SMEs deliver innovation, capability and skills required to propel UK’s defence capabilities and unleash the associated economic growth potential.
“Recent research from Manx Financial Group reveals that nearly a third of UK SMEs have already scaled back operations due to financial constraints. While this marks an improvement from last year, 10% still struggle to secure financing. With defence spending set to rise to 2.5% of GDP by 2027, it is imperative that the government aligns its growth ambitions with tangible financial support. A stable and inclusive lending environment, underpinned by targeted policy interventions, will be essential to ensuring SMEs can fully capitalise on new opportunities in the defence sector and beyond.”