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The purpose of this paper is to investigate how entrepreneurs demand for external finance changed as the economy continued to be mired in its third and fourth years of the global financial crisis (GFC) and whether or not external finance has become more difficult to access as the recession progressed.

Using a large-scale survey data on over 30,000 UK small- and medium-sized enterprises between July 2011 and March 2013, the authors estimate a series of conditional probit models to empirically test the determinants of the supply of, and demand for external finance.

Older firms and those with a higher risk rating, and a record of financial delinquency, were more likely to have a demand for external finance. The opposite was true for women-led businesses and firms with positive profits. In general finance was more readily available to older firms post-GFC, but banks were very unwilling to advance money to firms with a high-risk rating or a record of any financial delinquency. It is estimated that a maximum of 42,000 smaller firms were denied credit, which was significantly lower than the peak of 119,000 during the financial crisis.

This paper provides timely evidence that adds to the general understanding of what really happens in the market for small business financing three to five years into an economic downturn and in the early post-GFC period, from both a demand and supply perspective. This will enable the authors to consider what the potential impacts of credit rationing on the small business sector are and also identify areas where government action might be appropriate.

Since introducing the UK start-up loan (SUL) Scheme in 2012, 82,809 new start-ups have been supported with loans totalling £759m. Even during the Covid-19 crisis, new business start-ups supported by SUL did not abate. The authors ask whether the entrepreneurs starting businesses during the Covid-19 crisis were different from those becoming entrepreneurs before the pandemic. This paper aims to discuss the aforementioned question.

The authors model the differences between pre-Covid-19 business start-ups and Covid-19 start-ups. The administrative data obtained from the UK Government Department for Business, Energy and Industrial Strategy (BEIS) represent information about individual loan records for 82,798 individuals and total lending of £759m between 2012 and 2021. The probit regression model with dependent variable coded one if the start occurred after February 2020 and zero between 2012 and February 2020, was estimated.

The study’s findings show that both groups of entrepreneurs differ in many facets. The new Covid-19 entrepreneurs are older, more likely to have a graduate-level education and are significantly more likely to make this transition from full-time waged employment or inactivity. Furthermore, they are more likely to set up in manufacturing industries at the business level than their pre-Covid-19 counterparts who favoured service sectors. Finally, their initial lending to support the start-up is much higher.

This study provides value for the policymakers responsible for the administration of the SUL scheme, and it also contributes to the body of knowledge on the effects of the global Covid-19 pandemic.

Using ethnicity as our point of focus, the authors consider the dynamics of the demand for bank loans, and the willingness of banks to supply them, as the UK economy entered the COVID-19 pandemic in early 2020 with a particular focus on potential behavioural differences on the demand-side and discrimination on the supply-side. In doing so we directly address crisis induced financial concerns and how they played out in the context of ethnicity.

Using the most recent ten quarterly waves of the UK SME Finance Monitor survey the authors consider whether ethnicity of the business owner impacts on the decision to apply for bank loans in the first instance. The authors then question whether ethnicity influences the banks decision to meet or reject the request for a bank loan.

The authors’ pre-COVID-19 results show that there were no ethnic differences in loan application and success rates. During COVID-19, both white and ethnic business loan application rates rose significantly, but the scale of this increase was greater for ethnic businesses. The presence of government 100% guaranteed lending also increased general loan success rates, but again the scale of this improvement was greater for ethnic businesses.

The authors show very clearly that differences in the willingness of banks to supply loans to SMEs relate very explicitly to firm specific characteristics and ethnicity either plays no additional role or actually leads to improved loan outcomes. The data is for the UK and for a very unique COVID time which may mean that wider generalisability is unwise.

Ethnic business owners should not worry about lending discrimination or be discouraged from applying for loans.

The authors identify at worst no lending discrimination and at best positive ethnic discrimination.

This is one of the largest COVID-19 period studies into the financing of ethnic businesses.

The creation and distribution of human capital, often termed talent, has been recognised in economic geography as an important factor in the locational decisions of firms (Florida, 2002), and at a more general level as a key driver of economic growth (Romer, 1990). The purpose of this paper is to consider how talent is created and distributed across the cities of the UK and the key factors which are driving this spatial distribution. They also consider what the economic outcomes of these disparities are for cities.

The multivariate models can estimate the dynamic inter-relationships between human capital (talent), innovative capacity, and economic value added. These can be estimated, using talent as an example, in the form: human capital measure_i =α_0i+α_1i innovative capacity +α_2i quality of life + α_3i labour market indicators + α_4i economic indicators + α_5i HEI indicators + β_6i population demographics + β_7i population + υ_i.

The first finding is that talent is unequally distributed across cities, with some having three times more highly educated workers than others. Talent concentration at the city level is associated with entrepreneurial activity, culture, the presence of a university, and to a lesser degree the housing market. This feeds into more knowledge-based industry, which is associated with higher gross value added.

The research is limited in a practical sense by the fact that UK data at this level have only become available quite recently. Thus, it is only possible to capture talent flows and city growth in a relatively small window. But the prospects going forward will allow more detailed analysis at the city level of the relationship between talent flows and local economic growth. And additional insights could be considered relating to the on-going changes in the UK university system.

The question of whether universities are simply producers of talent or play a much broader and deeper role in the socio-economic landscape and outcomes of cities is an open one. This research has identified what the key drivers of city level economic growth and knowledge creation are, and sought to explain why some cities are capable of attracting and harnessing three times more talent than other cities. This has significant implications for the future development of UK cities and for those seeking to address these imbalances.

Universities are a major economic agent in their own right, but they are increasingly being asked to play a wider role in local economic development. The authors’ evidence suggests that universities do play a wider role in the growth and development of cities, but that there are large discrepancies in the subsequent spatial distribution of the talent they create. And this has significant implications for those seeking to address these imbalances and promote a broader and less unequal economic landscape.

The authors explore how cities create economic value via a process whereby talent is attracted and then this stimulates knowledge-based industry activity. The originality relates to several key aspects of the work. First, the authors look at the stock of talent, and then the authors explore how “new” talent from universities is attracted by looking at graduate flows around the cities of the UK, differentiating between top-level graduates and less talented graduates. The authors then allow a wide variety of economic, cultural, and population factors to influence the locational decision of talented people. The results highlight the complexity of this decision.

The Loan Guarantee Scheme (LGS) has, for the last thirteen years, been the foremost government initiative concerned with the financing of small businesses. It was developed to alleviate some of the fundamental problems that smaller firms face when seeking finance due to a lack of loan security, and the fact that some 33,500 firms have obtained funding under the scheme is an indicator of its success. The study uses econometric techniques to identify the influential determinants of LGS take‐up and failure rates. The results show that the two scheme parameters, the interest rate premium and the proportion of the loan guaranteed, were the key determinants of take‐up. On the other hand, failure rates were influenced by liquidity (cash flow), interest rates and other macroeconomic factors. We conclude that the government can directly influence the level of take‐up on the LGS by adjusting the two key parameters, namely the premium and the guarantee.

The Loan Guarantee Scheme (LGS) was set up in 1981 to fill a perceived gap in the financing of smaller firms. It was designed specifically for firms who were constrained in their ability to borrow from banks by a lack of collateral. In 1996, loans issued under the scheme were at their highest level ever and rising at an increased rate. This paper uses previously unavailable data to give a broad feel for how borrowing patterns have changed over the period 1987–1995, the type and nature of borrowers using the scheme and the type of loans which they take out. The results give a number of important insights which merit further attention from academics and policy‐makers. Unfortunately, there is no information on the attitudes of banks towards the scheme, although anecdotal evidence suggests that they have adopted a more favourable, proactive stance towards the scheme in the last three years.

Despite the importance of high-technology firms to the global economy, relatively little is known about factors contributing to these firms’ long-run growth. We examine these factors using a unique longitudinal dataset combining two waves of detailed surveys of 345 UK high-tech firms with performance data from UK official datasets. Overall we conclude that the early strategic decisions made by firms have long-run impacts on their subsequent growth, and we suggest that policy measures targeted at shortfalls faced by these firms may have positive long-term consequences.

Explores whether there are any significant performance and ambitions differences between independent family and non‐family unquoted companies in the UK. To detect “real” performance and ambitions differences, rather than demographic “sample” differences between family and non‐family companies, a “matched” sample methodology has been utilized. Concludes that there are strong similarities between the two groups of companies in terms of “hard” objective performance and ambition indicators. Such differences as do occur are reflected in the finding that family companies are markedly more likely to stress non‐financial objectives than non‐family companies. Discusses implications for future research exploring the characteristics and performance of family and non‐family companies.

This paper sets out to assess the market for start‐up finance in the UK for high growth potential entrepreneurial firms.

The paper uses data from the UK's Global Entrepreneurship Monitor surveys between 2001 and 2003 to assess the scale of equity finance in the UK. It further examines the strengths and weaknesses of the UK financial markets for supporting high growth potential firms on the basis of an additional survey of 60 experts conducted during September and October 2003.

The paper suggests that there are areas of the market that are strongly served by existing financial mechanisms. However, there is a perception amongst business support agencies, venture capitalists and entrepreneurs alike that the size of investments in the formal venture capital market has been increasing and that companies seeking investments above this level, up as high as £2 million, may be restricted in their access to finance. The paper tests this qualitative finding on a number of empirical data sources and finds that there is indeed an “equity gap” of between £150,000 and £1.5 million. It concludes that lack of finance in this area represents a brake on the expansion of high growth potential businesses in the UK.

The empirical data covered in this paper are from three large‐scale surveys of the adult population in the UK. While this is robust as a reflection of what is happening amongst the whole spectrum of business start‐up activity, the methodology was not originally conceptualised as a mechanism for assessing the scale of the equity gap. This evidence was gained from a qualitative survey of actors in the market. Further research should survey high growth potential firms and financiers themselves in more detail to develop the analysis on a more systematic basis.

The research will be of interest to policy makers who seek appropriate mechanism for developing a funding “ladder” to support businesses through the growth process. It identifies a clear gap in the market for growth finance that is evidence on which to base funding priorities in the future.

Academic and policy attempts to quantify the scale of the equity gap in the UK have been limited by availability of longitudinal and systematic data. As a result, they have tended to be largely qualitative in nature and prone to anecdote. Many of these studies do corroborate the findings reported here, but this does represent a first attempt to provide a quantification of the equity gap and thus should be of interest to policy makers, practitioners and academics alike.

Uses survey data to examine the nature of bank lending decisions at the local branch and regional office level. In doing so considers which firm and loan characteristics explicitly affect the nature of the lending contract. The results show the smallest firms, whose lending decisions are made at local branches, face slightly higher borrowing costs, yet this is offset by the reduced likelihood of collateral being requested. Further, suggests that the high degree of control aversion exhibited by such firms acts in a detrimental way by negating many of the obvious benefits of a localized banking relationship. On interest rate margins, presents clear evidence supporting credibility and legitimacy theories, with legal status and a lengthy track record reducing margins significantly. Regarding security levels, the results suggest that local branch banks have particularly short‐term lending horizons. The penalty in terms of collateral requirements on medium‐ to long‐term loans appear quite severe. This issue needs to be addressed to ensure that small firms in the UK receive the lower cost, longer‐term finance that would facilitate the structural growth of this sector.