Rural firms are more dependent on debt finance than urban firms, particularly overdrafts and credit cards. Equity finance is significantly less used by both rural and urban firms than other financing options. Rural firms are more likely to seek equity finance from family and friends.
Rural enterprises may suffer from poorer access to external finance and fewer options, due to potentially long distances to suppliers and the market. Their performance may be impeded due to limited access to external finance.
Employing the Longitudinal Small Business Survey 2015-2019 for firms in England located outside of London, the first part of this project considers whether firms’ use of external finance varies across, and within, urban and rural locations, and explores its impacts on business growth. The second considers demand for external finance of rural and urban businesses, discouraged borrowing and rejection decisions made by financial providers once firms had applied.