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Increasing the demand for external finance to create productivity gains in SMEs in the West Midlands

Small and Medium Enterprises (SMEs) are the main engine of local economic development and the use of external finance is positively associated with growth. However, due to information asymmetries, perceptions, and experiences as well as internal financial competencies access to external finance remains a constraint for many. Underlying how a firm operates is the importance of understanding its key financial metrics and how that can ‘trigger’ discussions within the senior management team about investment and the role of external finance.

The rationale for this project is driven by recent British Business Bank research which highlights that awareness of external finance options is lower in the West Midlands compared to other parts of the UK (BBB SME Finance Survey 2022. In addition, there is also a greater reluctance by businesses in the region to use external finance to grow.

Lead researcher Professor Mark Hart, Enterprise Research Centre, Aston Business School