The Path to a Stronger Economy Through Financial Inclusion
•February 10, 2026
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Why It Matters
Unlocking finance for small businesses and minority founders directly fuels GDP growth and job creation, making financial inclusion a strategic economic priority for the UK.
Key Takeaways
- •1 in 10 Brits plan to start business next year.
- •67% of 18‑34‑year‑olds consider entrepreneurship.
- •50,000 viable SMEs denied loans annually.
- •Closing finance gap could add £24.6 bn to GDP.
- •Digital tools essential for scaling side‑hustles.
Pulse Analysis
Financial inclusion has moved from a social ideal to a core driver of macro‑economic performance in the United Kingdom. Recent parliamentary pressure to compel banks into wider, affordable lending reflects a recognition that traditional credit models systematically exclude high‑growth potential SMEs and entrepreneurs from minority or rural backgrounds. By quantifying the demand—over five million prospective founders and 50,000 loan‑rejected firms—the report underscores a market failure that, if corrected, could unlock £7.4 billion in immediate capital and catalyse a broader productivity surge.
Beyond raw capital, the modern entrepreneur relies heavily on digital ecosystems to transform side‑hustles into scalable enterprises. Cloud‑based e‑commerce platforms, integrated payment solutions, and AI‑driven marketing tools lower entry barriers and accelerate cash‑flow cycles. Fintech firms like Square illustrate how sales‑linked financing, paired with accessible technology, can fill the gap left by legacy lenders, offering flexible credit that mirrors real‑time revenue streams. This synergy between finance and technology not only improves survival rates but also amplifies revenue growth without proportionate headcount increases, a key metric for national productivity.
For policymakers, the data presents a clear mandate: streamline regulatory pathways for inclusive lending, incentivise banks to adopt fintech‑enabled credit assessments, and invest in digital infrastructure across underserved regions. Such measures would translate entrepreneurial ambition into tangible economic output, generating jobs, diversifying regional economies, and reinforcing the UK’s position as a global innovation hub. In sum, bridging the finance gap and accelerating digital adoption are twin levers that can convert the current entrepreneurial wave into sustained, inclusive growth.
The path to a stronger economy through financial inclusion
The UK economy is at a critical juncture. And with senior Labour backbenchers now calling for legislation that would compel banks to widen access to affordable lending for small businesses and underserved communities, momentum for change is building. Growth may be the priority across every sector, but one of the most powerful levers for unlocking it is financial inclusion. Too many talented entrepreneurs are still held back by a system that doesn’t serve them equally.
The Entrepreneurship Revolution report, commissioned by Block and undertaken by Public First, shows that Britain is poised for a surge in entrepreneurship. One in 10 people in Britain want to start a business in the next year, equivalent to more than five million potential founders. More than two‑thirds (67 %) of 18–34‑year‑olds are considering entrepreneurship, and 15 % of the population already runs a side‑hustle. This surge signals a fundamental shift in how people want to work and earn.
The consequences of unequal access to finance are clear. Every year, more than 50,000 viable SMEs are rejected for loans. Addressing this unmet demand could unlock £7.4 billion, and even a modest 1 % productivity lift across SMEs – where revenue grows faster than headcount – could add £24.6 billion to the economy annually.
Adapt, pivot, reinvent – with the right support
Entrepreneurs need fast, equitable access to funding that reflects the realities of running a small business. Traditional finance often favours larger companies, leaving many SMEs without the tools they need to manage cash flow and invest in growth.
Data from the Entrepreneurship Revolution report underscores this gap. Access to finance is the single biggest barrier preventing side‑hustlers from turning part‑time ventures into full‑time businesses. Structural inequities can make the problem worse for those from under‑privileged backgrounds, who often face reduced access to networks, mentorship, and funding guidance. For example, ethnic‑minority entrepreneurs may have fewer opportunities to develop the business networks and skills needed to navigate financing successfully.
Addressing these systemic barriers is essential not only because it’s the right thing to do, it also benefits the economy at large. The report shows a quarter of ethnic‑minority entrepreneurs already run side‑hustles, and nearly as many plan to start a business in the next year—a clear sign of untapped potential.
But capital alone isn’t enough. Resilience and technology adoption are increasingly essential to business growth. Digital tools, from e‑commerce platforms to payment systems and marketing software, are critical for scaling operations, reaching customers, and responding to economic shocks.
Younger entrepreneurs consistently identify improved digital tools as essential to scaling their ventures, particularly technologies that help them reach customers and manage payments more effectively. At Square, we see how combining accessible technology with flexible, sales‑linked finance can support growth where traditional lenders fall short.
Economic empowerment for all
There is an urgent need to give all small businesses fair access to capital and the tools they need to invest and grow. While women and ethnic minorities face the clearest systemic gaps, other groups – including entrepreneurs based in rural areas and younger founders – are also affected. Closing these gaps strengthens the wider economy, not just individual businesses.
The real prize lies in turning entrepreneurial ambition into sustainable growth. When founders can access finance and technology that reflects how modern businesses operate, they are better able to scale, create jobs, and contribute consistently to local economies across the UK.
By addressing structural barriers to finance, accelerating the adoption of digital tools, and supporting resilient growth, the UK can harness the entrepreneurial energy already present across the country. This isn’t just a question of fairness; it’s about creating a stronger, more dynamic economy that works for everyone.
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