The difficulties of accessing bank finance and business support by Black African and Caribbean Entrepreneurs in London

This research seeks to identify and evaluate the influences of the ‘personal characteristics’ and ‘attitudinal behaviour’ of Black African and Caribbean Entrepreneurs (BACEs) in London when seeking finance and business support from banks and other external agencies. The reason for this choice of research was to try and understand whether some of the personal characteristics of BACEs had an influence on the barriers they often reported when accessing business finance from formal sources in London, notably High Street banks. In particular, this research examines the influences of different aspects of human and social capital, cultural factors and generational differences on the attitudes of BACEs when seeking external business finance. The empirical research coincided with the onset of the ‘credit crunch’ and the tightening of credit rationing by the banks, so that BACE experiences of accessing finance need to be considered in this context. The use of mixed data sources including both quantitative and qualitative data adds a new and original dimension to this study. Thirty (30) purposely selected BACEs, five (5) main High Street banks, six (6) enterprise agencies and one (1) public sector organisation were interviewed over a two and a half year period. The field work involved in-depth interviews to obtain information from the respondent BACE owner managers. The quantitative dimension involved analysis of the London Annual Business Survey (LABS) dataset to compare the experiences of BACEs in accessing finance with those of other ethnic businesses. This study found that the ‘attitudinal tendencies’ and behaviour of BACEs were closely related to their levels and types of human capital attainment. Results also suggested that the ‘cultural orientation’ of BACEs and their concentration in certain communities described as ‘ethnic enclaves’ were significant factors influencing their behaviour and attitudes when seeking finance and dealing with mainstream business support services. The views of some of the BACEs about discriminatory practices by banks can be largely attributed to their ‘perceptions’ and ‘self-imaging’ as little empirical evidence was found to support such claims. The lack of data on BACEs is a problem which requires attention by policy-makers if the myths around perceptions are to be managed. Many of the challenges of BACEs reported in research are submerged within data relating to SMEs as a whole, thereby making it difficult to focus on the particular needs of BACEs. This research found that a small but significant number of interviewed BACEs considered themselves to be the subject of ‘discrimination’. However, these attitudes could be largely attributed to various ‘human capital’ shortcomings. Some respondents may be also using the alleged discrimination to mask their own business failures. The thesis makes recommendations for improved re-engagement between the three principal agents and areas for future research are highlighted in the concluding chapter. Some of the main recommendations are geared towards fostering a better understanding and relationships between BACEs and finance providers as well as the need to promote good practices. The need for developing a database for Black businesses is long overdue.