Credit and the crisis: access to finance for innovative small firms

Since the 2008 financial crisis there has been a significant tightening in credit conditions and a dramatic reduction in bank lending to small firms. Government policy – such as the new Business Bank – has been focused on addressing this problem. A consensus has emerged that access to finance to small firms is one of the key factors holding back the national economy. Yet only a minority of small firms will actually drive the economic recovery – most small firms have little impact on job creation. In a time of limited resources, government policy needs to prioritise the needs of innovative small firms: firms which bring new products and processes to market and which are more likely to grow. The success of these firms will be vital for the long-term health of the UK economy.