Research Paper

The Uneven Spatial Nature of Access to External Finance in UK SMEs: Determinants, Impacts and the “Levelling Up” Agenda

ERC Research paper No 100

Associated Themes
  • Business Growth
  • Finance

Finance is crucial for new and small and medium-sized enterprises (SMEs) as it enables them to undertake growth-oriented activities enabling them to expand and upscale their operations.

Conversely, a lack of capacity to self-finance their activities can impede and hamper entrepreneurial activities coming to fruition, especially by firms with limited relational networks to access informal funds from family and friends. Despite this, SMEs often face perennial problems accessing finance which can hamper productivity growth.  These problems can be particularly acute for SMEs located in certain parts of the UK, especially those located in northern and peripheral regions.

In this report, the authors provide new evidence on some of these problems SMEs confront obtaining finance in different parts of the UK.  In particular, it examines the effects of self-exclusion from the credit market in the UK.  The focus of this study is on bank finance as this is the dominant form of funding used by SMEs, accounting for 85% of all outstanding debt owed by UK SMEs.