Size isn't everything

There is an ongoing and heated debate in the UK about the importance of small and medium sized enterprises for economic recovery, and the willingness or otherwise of traditional banks to lend to these businesses.  Despite repeated efforts to stimulate lending by the government and the Bank of England, net lending to SMEs has been steadily falling.

The SME sector is widely misunderstood and misrepresented. This project examines whether the group as a whole is a major contributor to economic growth; the extent – if any – to which there is a funding “crisis” for SMEs in the UK; and explores whether bank loans are the proper source of funds for most of these companies.

The report considers whether current policy is geared sufficiently towards driving economic growth, and what more could be done to encourage and support those businesses that do have the potential to significantly drive our economy forward.

Methodology

The six-month project combines desk-based research that seeks to untangle the current jumble of statistics on SMEs and SME lending, with analytical fieldwork that examines in detail the process of loan applications and decision-making in a high street bank.

The research findings and recommendations will be published in August 2013.

Staff

Demos Finance Director Andrew Freeman is leading the research on this project. You can contact him at andrew.freeman@demos.co.uk

Funding

The project is supported by Barclays.