This paper, written jointly with ADS Group, highlights critical recommendations to address financing challenges facing SMEs and scale-ups in the UK defence sector. These challenges, if resolved, can unlock innovation, enhance economic contributions, and ensure resilience across the defence supply chain.
Key recommendations
- Streamline procurement: Addressing procurement barriers that hinder cashflow and make investments in defence businesses riskier for financial institutions.
- Reducing due diligence redundancy: Collaboration between government, regulators, and industry to eliminate duplicate due diligence checks for MoD-approved SMEs.
- Sustainability assurance: Proactive reassurance from regulators that sustainability rules do not prevent financing for defence companies.
- New guarantee scheme for defence: Establishing a scheme similar to British Business Bank or UK Export Finance programmes, to provide guarantees and make lenders more comfortable with uncertain cashflows.
The report underscores the pressing need for collaboration across government, regulators, and industry to create a more supportive financial environment for the defence sector. By addressing these challenges, the UK can further enhance innovation, economic growth, and resilience within this essential industry.