ABSTRACT
This chapter identifies the products for both day-to-day and the capacity-building finance needs of small firms using data from the United Kingdom (UK). It first looks at the aggregate profile of financing of small firms in the UK. Second, it reviews the sources of external finance selected from the UK analysis against data for key international markets. A large number of firms are funded from internal sources for cash-flow purposes without any plans for expansion or growth. Firms that are unable to fund in an entrepreneurial phase in business development from internal sources seek external suppliers to fill the gap. The five core product groups that cover the external financing activities for small and entrepreneurial firms are (1) overdrafts and credit cards, (2) structured debt products, (3) leasing and Hire Purchase (HP), (4) invoice finance and (5) third-party equity. The inclusion of equity appears at odds with its low level of use in the small business market as a whole.
