Demand for external finance by environmentally-motivated SMEs: An exploration of geographical disparities and potential in relation to Net Zero

Using UK Longitudinal Small Business Survey (LSBS) 2017-2021 annual data waves and geographical and digital accessibility indices, the paper investigates how regional disparities and peripheral location impact on the use and demand for external funding by green UK SMEs and social enterprises (SEs). Green SMEs are defined by the LSBS as those that declare having environmental goals as their sole or primary business objective, and those that have green objectives but prioritise profit-making. Social enterprises have social or ethical goals, generate income from trading activities, and use resultant profits to further those goals. Although the paper focuses on geographical disparities, it also examines whether the rise of digital finance and FinTech has changed how SMEs obtain external finance. The relationship between green external financing and SME skills and capabilities, future business intentions, industrial sectors and other business environment characteristics, such as urban versus rural location, local deprivation index, is also analysed.