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The Loan Guarantee Scheme (LGS) has, for the last thirteen years, been the foremost government initiative concerned with the financing of small businesses. It was developed to alleviate some of the fundamental problems that smaller firms face when seeking finance due to a lack of loan security, and the fact that some 33,500 firms have obtained funding under the scheme is an indicator of its success. The study uses econometric techniques to identify the influential determinants of LGS take‐up and failure rates. The results show that the two scheme parameters, the interest rate premium and the proportion of the loan guaranteed, were the key determinants of take‐up. On the other hand, failure rates were influenced by liquidity (cash flow), interest rates and other macroeconomic factors. We conclude that the government can directly influence the level of take‐up on the LGS by adjusting the two key parameters, namely the premium and the guarantee.

The Loan Guarantee Scheme (LGS) was set up in 1981 to fill a perceived gap in the financing of smaller firms. It was designed specifically for firms who were constrained in their ability to borrow from banks by a lack of collateral. In 1996, loans issued under the scheme were at their highest level ever and rising at an increased rate. This paper uses previously unavailable data to give a broad feel for how borrowing patterns have changed over the period 1987–1995, the type and nature of borrowers using the scheme and the type of loans which they take out. The results give a number of important insights which merit further attention from academics and policy‐makers. Unfortunately, there is no information on the attitudes of banks towards the scheme, although anecdotal evidence suggests that they have adopted a more favourable, proactive stance towards the scheme in the last three years.

Using ethnicity as our point of focus, the authors consider the dynamics of the demand for bank loans, and the willingness of banks to supply them, as the UK economy entered the COVID-19 pandemic in early 2020 with a particular focus on potential behavioural differences on the demand-side and discrimination on the supply-side. In doing so we directly address crisis induced financial concerns and how they played out in the context of ethnicity.

Using the most recent ten quarterly waves of the UK SME Finance Monitor survey the authors consider whether ethnicity of the business owner impacts on the decision to apply for bank loans in the first instance. The authors then question whether ethnicity influences the banks decision to meet or reject the request for a bank loan.

The authors’ pre-COVID-19 results show that there were no ethnic differences in loan application and success rates. During COVID-19, both white and ethnic business loan application rates rose significantly, but the scale of this increase was greater for ethnic businesses. The presence of government 100% guaranteed lending also increased general loan success rates, but again the scale of this improvement was greater for ethnic businesses.

The authors show very clearly that differences in the willingness of banks to supply loans to SMEs relate very explicitly to firm specific characteristics and ethnicity either plays no additional role or actually leads to improved loan outcomes. The data is for the UK and for a very unique COVID time which may mean that wider generalisability is unwise.

Ethnic business owners should not worry about lending discrimination or be discouraged from applying for loans.

The authors identify at worst no lending discrimination and at best positive ethnic discrimination.

This is one of the largest COVID-19 period studies into the financing of ethnic businesses.

The purpose of this paper is to evaluate Alberta’s cattle loan guarantee program. It measures the risk premiums on lending that would accrue to banks participating in the program, estimates the value (price) of the loan guarantee, and estimates the interest subsidy provided by the program.

A cash flow model of cattle feeding is used. The model estimates a measure of risk that is applied to option pricing models to estimate the value of the guarantee.

Insurance premiums for the credit risk to lenders are 0.20 percent of the value of the loan for the entire feeding period, and 0.41 percent for backgrounding but negligible for finishing. The price of the loan guarantee estimated by the Black-Scholes model is 4.43 percent of the value of the loan and is comparable to prices estimated by the binomial model. The program provides a subsidy rate of 4.58 percent.

Charging a guarantee fee can potentially eliminate the interest subsidy inherent in the program. But this would necessitate determining the impact of the guarantee fee on the additional access to credit that has been achieved through the program.

Different levels of risk for backgrounding and finishing imply different risk premiums on cattle loans. Therefore interest on cattle loans should reflect not only the individual farmer’s risk profile but also the nature of the feeding operation.

This is the first paper to simultaneously estimate risk premiums on cattle feeding loans, the value of the loan guarantee provided by the Alberta Feeder Association Loan Guarantee Program, and the inherent interest subsidy.

The purpose of this paper is to investigate whether guarantees characterised by different degrees of relationship lending (particularly referring to collateral and guarantees provided by Mutual Loan Guarantee Institutions) are able to convey some entrepreneurial orientation (EO) dimensions from firms to banks.

Exploiting data from a survey of Austrian and Italian SMEs, the empirical analysis is based on a sample of 328 small business firms. To test the signalling hypothesis, the authors used logistic regressions to assess the explanatory power of EO dimensions on the presence of several types of guarantees.

The analyses suggest that collateral cannot signal any EO dimension, even when controlling for the strength of the bank – firm relationship. Furthermore, SMEs are able to mitigate their financial risk through collateral only in a multiple bank – firm relationship. Lastly, innovativeness, competitive energy and aggressiveness allow SMEs to obtain external guarantees (mutual guarantees, bank guarantees and public guarantees, respectively), helpful in order to promote credit access.

The mediation role of collateral and external guarantees on EO – credit access relation should be analysed in future research. Since the role of guarantees can change among different bank lending technologies, further studies should carefully consider lender’s characteristics. Lastly, the use of loan data in respect of the firm data can help to better separate the effect of loan and firm attributes on the collateral.

The study suggests how managers and entrepreneurs should manage the financial risk through collateral in different situations (one–to–one and multiple bank – firm relationship). Furthermore, depending on the level of innovativeness, competitive energy and aggressiveness, a firm should request a specific type of external guarantees in order to increment the credit availability, to maximise the possibility of success and to improve its performance.

To the authors’ knowledge, this paper is the first attempt to analyse whether EO affects the request for guarantees instead of credit access. This can be helpful especially when the banks involved in the relation apply a transaction lending technology.

Although the UK Guarantee Scheme for Infrastructures (UKGSI) was introduced in 2012 to address the huge financing gap for critical infrastructures, PFI sponsors have so far guaranteed only few projects. Many stakeholders in the project finance industry have blamed this situation on lack of general understanding of strategies for harnessing the benefits of the government guarantee scheme. The purpose of this paper is to investigate the perspectives of UK’s PFI/PPP stakeholders on critical factors influencing approval for government guarantees using the UKGSI as a focal point.

Using a mixed methodology approach, this study identified 26 important criteria used in evaluating government guarantee applications through focus group discussions with PFI stakeholders. The identified criteria were then put in questionnaire survey to 195 respondents within the UK PFI/PPP industry.

Through factor analysis, five critical factors determining successful government guarantee application were unravelled. These include: compliance with UK National Infrastructure Plan; demonstration of project bankability and risk management; value for money; proof of projects’ dependence on government guarantee; and certainty of planning commission’s approval.

Results of this study will facilitate an in-depth understanding of critical factors necessary for accessing government guarantee scheme for PFI/PPPs, while also improving the bankability of potential PFI projects.

The purpose of this study was – first, to find out how to evaluate affordability of housing in the Estonian market and, second, to assess the regulatory framework decisions' impact on the housing market in Estonia.

This article seeks answers to how to define housing affordability for the Estonian housing market. It also describes the regulatory framework and policy decisions made by the government.

Calculations show that there is an affordability problem, and political decisions have helped to make housing loans affordable for households, but at the same time the high debt burden has weakened households' financial position.

It could be possible to research the market using the databases of credit institutions, but the given data is under the protection of banking confidentiality.

The HAI index, proposed by the authors, could be calculated regularly and it could be used as a possible indicator to evaluate the capability of the population to take on household loans in the Estonian household market as a whole.

The problem of housing affordability is very important for all households, and there is a need to continue with research in this field. Some households cannot buy a house, some have loan repayment problems.

No research has been done in trying to find an answer for the affordability problem in the housing market in Estonia. Also there are no analyses about the impact of the regulatory framework on the housing market – whether the government goals are achieved or not.

The amount of finance required by co‐operatives subsequent to start‐up seems to be inconsistent with any rapid growth phase and symptomatic of steady growth. Their growth and development pattern can be described as Phase 1: Formation, Phase 2: Consolidation, and Phase 3: Maturity; a study of a sample of older co‐operatives would show “consolidation” as an extension of the gestation period and that industrial co‐operatives take longer to gestate.

The purpose of this paper is to investigate how entrepreneurs demand for external finance changed as the economy continued to be mired in its third and fourth years of the global financial crisis (GFC) and whether or not external finance has become more difficult to access as the recession progressed.

Using a large-scale survey data on over 30,000 UK small- and medium-sized enterprises between July 2011 and March 2013, the authors estimate a series of conditional probit models to empirically test the determinants of the supply of, and demand for external finance.

Older firms and those with a higher risk rating, and a record of financial delinquency, were more likely to have a demand for external finance. The opposite was true for women-led businesses and firms with positive profits. In general finance was more readily available to older firms post-GFC, but banks were very unwilling to advance money to firms with a high-risk rating or a record of any financial delinquency. It is estimated that a maximum of 42,000 smaller firms were denied credit, which was significantly lower than the peak of 119,000 during the financial crisis.

This paper provides timely evidence that adds to the general understanding of what really happens in the market for small business financing three to five years into an economic downturn and in the early post-GFC period, from both a demand and supply perspective. This will enable the authors to consider what the potential impacts of credit rationing on the small business sector are and also identify areas where government action might be appropriate.

Under the Thatcher Government′s “Enterprise Culture”, the size of the small business sector has frequently been taken as a key indicator of economic success in Britain. Measurement of achievement in such terms does indeed indicate a high degree of economic buoyancy. However, a deeper examination of available data indicates that much of this success may be illusory and dependent for its survival on substantial levels of state intervention. At the same time, an examination of regional patterns of small business success reveals a picture somewhat similar to that pertaining to the economy as a whole. Far from raining down success selectively on economically deprived areas, as had been hoped in some circles, it appears that it is the most prosperous areas which tend to support the highest levels of enterprise.