Viewpoint: The Role of Policy in SME Finance: Demand Side Perspectives


Access to finance continues to be an important policy question, in particular to ensure that small businesses have the capital they need to help them achieve their innovation and growth objectives, and so help increase the overall numbers of companies that can scale-up. The focus of government policy on access to finance has been on supply side interventions, which come in different guises, from incentives for investors to government acting as a direct investor or lender.

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In this Viewpoint, which focuses on equity, we argue that more needs to be done on the demand side to stimulate take-up amongst small businesses, and to help those companies that require investment for growth. This should include support to increase awareness of the potential role of equity finance, and also support to improve the quality of propositions that are put in front of investors. In addition, we draw on our own recent work to highlight how a supportive 'ecosystem' can be created – which is of particular importance to geographical areas where the market for growth finance is under-developed.

The Viewpoint puts these arguments forward in the context of recent changes in the landscape for finance for small businesses. A number of the key developments in the landscape are identified and summarised, in particular in relation to venture capital, business angels and crowdfunding.

Download Viewpoint: The Role of Policy in SME Finance: Demand Side Perspectives