Strapped for Cash? Funding for UK high growth SMEs since the global financial crisis

Ross Brown and Neil Lee

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: While high growth firms (HGFs) are crucial drivers of economic growth, to date there has been a dearth of research examining their funding requirements. Drawing on a survey of over 8,000 UK Small and Medium Sized Enterprises (SMEs), this paper investigates the capital structure and access to credit in high growth SMEs in the period following the global financial crisis. The findings challenge conventional wisdom about high growth SMEs in certain respects. They find it no harder than non-high growth SMEs to access external finance. The vast majority of high growth SMEs rely strongly on debt-based finance for their funding, not equity finance. High growth SMEs are much less likely to seek finance for working capital purposes but are no more likely to seek finance to invest in R&D than less rapidly growing SMEs. The findings suggest little justification for government intervention aimed at increasing credit availability for HGFs as currently espoused by the UK government.

Keywords: Entrepreneurship; SMEs; Gazelles; Innovation; Access to finance; Policy (search for similar items in EconPapers)
JEL-codes: G21 G32 O31 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2019-06-01
New Economics Papers: this item is included in nep-cfn, nep-fdg and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published in Journal of Business Research, 1, June, 2019, 99, pp. 37-45. ISSN: 0148-2963

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http://eprints.lse.ac.uk/100013/ Open access version. (application/pdf)

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Journal Article: Strapped for cash? Funding for UK high growth SMEs since the global financial crisis (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:100013

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