Wales’ SMEs face a big productivity and sustainability challenge, according to a new report by NatWest.

The bank's 2021 Small Business Report is an industry-wide review into UK SME recovery, conducted in consultation with the British Chambers of Commerce and the Federation of Small Businesses.

NatWest conducted research with more than 1,000 UK SMEs, and analysed more than 100 reports and support programmes globally to identify the barriers to SMEs reaching their potential.

The report, which will be shared with the UK Government as it develops the Help to Grow initiative, identifies that SMEs often struggle to find a support programme tailored to their needs.

Only one in five SMEs find the right programme and decide to enrol on it and just one in 20 receive a significant productivity boost by changing their business after taking part in a programme.

The report said that better targeted and personalised support for SMEs could unlock a £140bn prize equivalent to around 400,000 new SMEs in the UK economy.

In response to the report’s findings, the bank has unveiled a series of initiatives focused on scaling up micro businesses, unlocking the untapped potential outside London, and boosting skills and technology adoption.

These include a funding commitment of £6bn to support SMEs to scale and grow with £4bn of that allocated outside London and the creation of 30 local enterprise managers and 20 entrepreneur acceleration managers designed to give businesses the support they need, when they need it, and a commitment to help 10,000 NatWest customers to get the best training or growth opportunity.

The bank has also announced new partnerships with Business in The Community, Hatch and Digital Boost, to empower underrepresented entrepreneurs and communities and embed new skills and technology.

Andrew Harrison, head of Business Banking, NatWest said: “The findings of this report have shown us that SMEs are not a homogenous group, and that support available across Wales and the wider country need to be more closely tailored to their specific needs.

"We’re also seeing a continued disparity in the allocation of support and funding by gender, location and ethnicity. It’s the responsibility of our entire industry to help reset this balance to help all SMEs and by extension the UK economy to thrive again."

Federation of Small Businesses national vice chairman Martin McTague said: “This report marks a helpful contribution to efforts to improve small business policy and there are suggestions here worthy of serious consideration.

"It’s encouraging to see NatWest championing the small business cause, and we look forward to it, and all major banks, doing absolutely everything in their powers to help small firms recover from a torrid year.

"Many are emerging with high levels of debt, low levels of cash and shattered confidence as they look to make their way in a trading environment that remains unpredictable. We need to see government, big businesses and financial service providers alike pulling out all the stops to help the small firms and sole traders that make-up 99 per cent of our business community get our economy firing on all cylinders again.”

Adam Marshall, director general of the BCC, said: “SMEs are the engine-room of the economy and their ability to bounce back and grow exponentially will be crucial to the UK as a whole as it emerges from lockdown. It’s great to see the potential of our SMEs reflected in NatWest’s new report, which hits on many of the key drivers that would enable small and medium-sized firms to restart, rebuild and renew.

“To boost productivity, SMEs need to be able to invest more in skills and digital innovation. Mentoring will also allow bosses to understand their companies’ needs and allow them to rapidly adapt to changes in the workplace and the market."