Small firm finance and public policy

Examines how a finance gap for small firms might be addressed by means of government policy to support informal financing initiatives. A review of both the finance and the government policy literature provides the basis for discussing and conceptualising the financing difficulties faced by small firms, the role of informal financing in alleviating certain of these difficulties and the areas where public policy is currently usefully employed in addressing such financing problems. Undertakes a questionnaire survey to collect data concerning small business awareness and use of informal finance and to identify issues concerning difficulties encountered in gaining access to finance. The results suggest that a debt finance gap may exist for a minority of firms, though an equity finance gap may represent a more significant issue for small firms. Four categories of policy action emerge from the study towards the achievement of economic and social policy objectives.