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Funding issues confronting high growth SMEs in the UK

Brown, Ross and Lee, Neil (2014) Funding issues confronting high growth SMEs in the UK. . ICAS, Edinburgh, UK. ISBN 9781909883055

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Abstract

How do we ensure that companies with the potential to grow do so? Does a lack of finance prevent firms from growing and benefiting the wider economy? These are important questions if we are looking for economic growth. There has been much focus and debate on the funding issues affecting small and medium sized entities (SMEs), but this report takes that debate a stage further by investigating ‘high growth SMEs’. One of the 14 published policies of the Department of Business, Innovation and Skills (BIS) in the UK is ‘Making it easier to set up and grow a business’. This report aims to provide evidence for the debate on how this policy can be achieved and covers both supply and demand issues for high growth SMEs. It does so by a review of the existing literature, an analysis of the Small Business Survey, undertaken by BIS, and a series of in-depth interviews with a small number of high growth SMEs. The study finds that although high growth SMEs are 9% more likely to apply for finance than other SMEs, they are no more or less likely to be successful. Importantly, these firms are identified as highly ‘reluctant borrowers’ rather than ‘discouraged borrowers’ – that is they are just unwilling to borrow, even to fund growth. This reluctance stems from a lack of trust of banks and a resistance to any dilution in their own autonomy. A number of policy implications are drawn from this research by the authors, with recommendations for both the supply and the often neglected demand-side of funding. Most importantly, though, there is a need to consider how ‘reluctant borrowers’ may be transformed into ‘willing borrowers’ and how demand for finance may be stimulated in the future.

Item Type: Monograph (Report)
Official URL: http://icas.org.uk/
Additional Information: © 2014 The Authors
Divisions: Geography & Environment
Subjects: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Geography and Environment
Date Deposited: 26 Jun 2014 10:41
Last Modified: 20 Feb 2019 02:01
URI: http://eprints.lse.ac.uk/id/eprint/57264

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