Sylvia Gottschalk, Prof. Robyn Owen and Isco Coban

The UK Government aims to build a low-carbon, ‘green growth’ economy to meet net-zero and biodiversity goals, level up the economy, and establish a leading global green sector. Our research examines how to finance the green transition for established SMEs in England. The main findings from our 2023 analysis of the Longitudinal Small Business Survey (LSBS) highlight the uneven access to debt finance for SMEs, with smaller, less-resourced SMEs in remote areas facing the most challenges.

In 2024 we conducted 21 qualitative interviews with supply-side stakeholders, including banks, non-bank debt providers, finance brokers, and business support organizations, focusing on London and the rural South-West. Key findings reveal a two-tier SME financing system in England: larger, well-resourced SMEs can access traditional bank debt finance and government green grants, while smaller, less-resourced SMEs struggle due to insufficient internal funds, information, and external finance options. These smaller SMEs often turn to alternative non-bank debt finance, sometimes through brokers, who play a crucial but inconsistent and unregulated role. Additionally, limited and poorly targeted grant funding, along with landlord-tenant property restrictions, hinder the green transition for many SMEs.

Reference

Gottschalk S, R Owen and I Coban 2024. Are English SMEs disadvantaged in accessing Green Finance? A study of UK (bank and non-bank) debt finance provision. London: Middlesex University. https://cusp.ac.uk/themes/finance/report-mdx-greenfin-smes/