In the current competitive landscape, small and medium-sized enterprises (SMEs) face increasing challenges in attracting and retaining talented employees. Many are exploring affordable strategies to enhance their workforce while meeting industry demands.
One often-overlooked solution is apprenticeships, which provide structured, work-based learning funded by the government, allowing SMEs to recruit new talent or enhance existing skills.
However, many small business owners are uncertain about apprenticeship financing, the applicability of the Apprenticeship Levy, and how to get started.
This guide offers clear advice on apprenticeships for SMEs, explaining the funding system, available assistance, and why hiring an apprentice can be one of the best investments for your business this year.
Why Apprenticeships Matter for SMEs
For small and medium-sized enterprises (SMEs), apprenticeships are an effective way to attract new talent, upskill existing employees, and close skills gaps without overstretching budgets. Apprentices bring fresh ideas and enthusiasm, while employers benefit from motivated staff who are learning the latest industry practices.
Unlike large levy-paying organisations, most SMEs don’t have to contribute to the Apprenticeship Levy, but they can still benefit from government funding to train apprentices. Understanding how the system works can help your business capitalise on these opportunities.
How the Growth and Skills Levy Works
The Growth and Skills Levy primarily applies to large employers with an annual payroll exceeding £3 million, who are required to pay 0.5% of their payroll into the levy.
If your business is not a levy payer, you can still take advantage of apprenticeship funding. In fact, SMEs receive substantial government support to cover training and assessment costs.
According to the UK Government’s guidance on employing an apprentice:
- The government funds 95% of training and assessment costs for non-levy employers.
- SMEs contribute just 5%, paid directly to the training provider.
- If your business has fewer than 50 employees, you’ll pay nothing if you take on an apprentice aged 16–18 (the government funds 100% in this case).
This makes apprenticeships a cost-effective route to develop skills tailored to your organisation’s needs.
Funding Options and Support for SMEs
In addition to the government’s co-investment model, small businesses can also access levy transfers from larger organisations that have unspent levy funds.
This means an SME can have up to 100% of their apprenticeship training costs covered if partnered with a levy-paying employer willing to transfer part of their unused funds.
Universities and providers such as Manchester Metropolitan University offer guidance to help SMEs find the right apprenticeship standard, understand funding rules, and connect with levy partners.
Benefits of Hiring an Apprentice as an SME
Hiring an apprentice offers a range of business benefits beyond funding support:
- Develop in-house talent: Train employees with the exact skills your business needs.
- Boost productivity: Research shows that 78% of employers report improved productivity after hiring apprentices, and 86% say apprenticeships help develop skills relevant to their organisation, and 74% found apprenticeships improved the quality of their products or services.
- Improve retention: Apprentices are loyal to employers who invest in their growth.
- Access fresh perspectives: Young apprentices bring energy, creativity, and adaptability.
- Enhance your brand: Demonstrating commitment to workforce development can strengthen your reputation with clients and partners.
Many SMEs find that apprentices quickly become indispensable members of the team, contributing to projects, customer service, and innovation.
Getting Started: Steps for SMEs
- Identify your skills needs: What roles could benefit from additional support or upskilling?
- Choose an apprenticeship standard: Find the most relevant training programme through Skills England.
- Select a training provider: Partner with an approved provider who can deliver quality training and help manage funding applications.
- Advertise your apprenticeship: Use the Find an apprenticeship service to attract motivated candidates.
- Access funding – Set up a digital apprenticeship account to receive government contributions and manage payments.
Apprenticeships: A Growth Strategy for SMEs
Apprenticeships aren’t just a training route; they’re a strategic investment in your company’s future. By developing employees through structured learning, SMEs can boost productivity, innovation, and long-term business resilience.
Whether you pay into the levy or not, there’s a funding pathway that works for you. With government support covering up to 100% of training costs, there’s never been a better time to hire an apprentice.
Ready to Get Started?
If you’re an SME looking to attract fresh talent, improve productivity, and access government-funded training, apprenticeships are a powerful way to do it.
Access Industry works closely with employers of all sizes to design and deliver apprenticeship programmes that meet real business needs. From helping you understand funding to finding the right standard and candidate, we’ll guide you every step of the way.
Want to learn more about apprenticeships for your business?
Contact Access Industry today to find out how apprenticeships can help your business grow and how to take advantage of available funding and support.
