Our finite public funds are best deployed alongside private capital to meet evolving demand
Chief executive of of the Development Bank for Wales Giles Thorley.(Image: Matthew Horwood)
When people talk about “access to finance”, the debate can sound disarmingly simple. Banks should lend more, government should plug the gap. In reality, fixing the supply side ignores the far bigger question of demand. Confidence, conditions, product fit, place and incentives that either enable investment or quietly deter it.
The latest Wales SME Access to Finance report, from the British Business Bank and supported by Economic Intelligence Wales, reflects that nuance. It contains genuine positives: eight in ten Welsh SMEs say their cash flow is currently positive. It also sets out stubborn challenges: Wales has the highest share of SMEs reporting barriers (19%) and the lowest share anticipating they’ll need finance over the next year (17%). If we want more innovation, investment and growth, we must treat those friction points as the work to be done, not as a footnote to a stable status quo.
The economic backdrop matters
Context is doing a lot of work here. After the inflation shock, price pressures have eased but not vanished: UK CPI was 3.4% in December 2025, above the 2% target and still high enough to make many owners cautious about borrowing. The Bank of England cut the base rate to 3.75% in December, with most forecasters expecting gradual further easing through 2026. Yet insolvency figures remain elevated by historical standards, even if monthly totals fluctuate.
None of that screams crisis but nor does it shout exuberance. If you are running a good business on tight margins, “wait and see” can feel like the smartest, safest choice.
What the data tells us
First, barriers are persistent. One in five Welsh SMEs reports a barrier when seeking finance, a higher rate than Scotland or Northern Ireland with factors including ability to repay, awareness of the options or the complexity of the process.
Second, confidence varies by place. In South West Wales, only 45% of respondents that plan to raise finance feel confident they’ll secure it, compared with 62% across Wales.
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Third, the product mix is skewed short term. Heavy use of business and personal credit cards, plus lingering Covid era loans, is not “wrong” but it can be expensive and suboptimal for growth investment.
The report shows “0% equity usage” in North Wales. With small samples, granular percentages splits can mislead. Equity is being deployed in the region, for example we’ve completed 54 equity transactions there, and encouragingly 10% of respondents say they plan to raise it signalling growing awareness of the value of patient capital.
It’s interesting here to look at Economic Intelligence Wales’s recent report on the role of technology in banking. This highlighted that over half of businesses stay with the same bank for more than 20 years and 84% of those with the 4 largest high street banks. 59% communicate with their banks at least every six months but only 1% of those interactions are face to face. When real decision makers feel far away, and processes feel opaque, confidence suffers. We should be nudging more businesses toward finance and funders that fit the job: asset lines for kit, working capital tools for seasonality, and equity for scaling innovation.
Where does this leaves the Development Bank of Wales?
We exist to help where markets under-deliver. Since 2017, we’ve passed £1bn invested across Wales, supporting 4,700 businesses. That matters, and I’m proud of the team and the entrepreneurs behind those numbers. But we are one, very small piece of a bigger system, and we are here to work alongside private capital, not replace it.
Relationship banking has receded, decision making centralised, and the local “credit conversation” is harder to find. That affects confidence and navigation—especially for smaller firms.
What we’re doing, practically, is rooted in place. Our teams are based in communities across Wales, so the first conversation happens locally and on our customers’ terms, we back that up with our learning hub that helps time pressed owners navigate the finance landscape in straightforward terms, and a ‘founder playbook’ focused specifically on using equity well at the earliest stages. We work closely with Business Wales, so referrals, information and support should feel seamless, one system, multiple doors.
And we are actively seeking to work collaboratively with other public finance institutions to align products, co-fund where it makes sense, and cut duplication. The aim is simple: clearer guidance, quicker routes to the right capital, and a joined-up ecosystem that puts Welsh businesses, wherever they are, at the centre.
Banks and brokers can partner with us on navigation. If a business is a better fit for our product, send them our way for co-funding, if they’re a better fit for yours, we’ll do the same. The goal is fewer dead ends and faster “right fit” financing.
Universities and tech hubs can keep feeding the pipeline across innovation led clusters and help us replicate that readiness in more places. Spinouts are a strength, let’s make sure the capital muscle around them is equally strong beyond the M4 corridor.
Where mandates allow, institutional investors can help us build the structures that channel more patient capital into Welsh productivity assets without compromising risk and return discipline.
Stability isn’t the enemy. But complacency is
It’s easy to caricature Welsh SMEs as “too cautious.” I don’t buy it. Many are being sensibly prudent after a bruising few years. Our job is not to wag fingers at prudence, it is to reduce friction so that when founders see a credible growth opportunity, the path to funding is short, clear and proportionate.
That is what a development bank can do in 2026: fix navigation, reduce effort, broaden options, and crowd in scale. We will do that consistently, locally, transparently, and with partners, and in doing so Wales will convert more of its resilience into growth. We are a small nation with enormous creative and industrial potential. The report reminds us that the friction founders feel isn’t just interest rates, it’s navigation, confidence, and fit.
Eight years in, sustained growth in our investment activity shows the model is working, but the economy in 2026 is materially different from 2017. As needs shift with conditions and with funders’ risk appetite, our finite public funds are best deployed alongside private capital to meet evolving demand and multiply impact.
In Wales, we’re very good at resilience. The next step is to be just as good at backing ourselves. Confidently, patiently, and at scale.
- Giles Thorley is chief executive of the Development Bank of Wales
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