Fewer than 1 in 8 small firms seek external finance. ERC research has highlighted the joint role of needs (broadly, cost and ambition) and perceptions about the availability of finance in decisions to seek external funding. What is preventing SMEs from investing and accessing external finance? Here we consider the role of and relationship between firm financing needs and business owner perceptions.
Using SME Finance Monitor data, this project looks at the varying extent to which a lack of needs and/or perceptions dissuade different types of firm from seeking external finance. We are particularly interested in firm which innovate and export. We will compare this analysiswith more traditional supply side concerns about the lack of finance available to these groups. We will also consider the extent to which demand and supply side financial constraints impact on firms’ growth plans.