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This review looked at the experiences, attitudes and practices of BACEs with regards to the widely documented barriers to accessing finance. The accounts and understanding of the commercial banks is reviewed but not conclusive enough to make generalisations. The experiences of BACE owner managers in the UK in general in raising finance are varied and the nature of the problems they face are quite complex. The range of possible explanations offered to the perceived difficulties that some ethnic minority businesses experience in raising finance is in many respects similar across a number of studies documented. But most research focus on the wider SME groups and the particular BACE category appear to be assumed in generalisations which completely masks the real issues they face. Some of the gaps in literature, rest on the impenetrable systems of loans assessment framework and decision making of lending banks, which needs further investigations. More qualitative research is desirable in understanding some deep-rooted perceptions of BACEs and the need to develop strategies that foster relationships.

It is also clear that the evidence presented in the literature reviewed suggests that banks and other finance providers have to recognize that the needs of BACEs are beyond economic basis alone, as cultural and other characteristic factors need to be integrated in the decision-making processes. BACEs themselves have a role to play in improving their access to external sources of finance. This is partly a matter of ensuring that they consider the full range of sources of finance available to them. There is increasing evidence to suggest that some BACEs tend to associate business failures with perceptions of discriminatory practices of lending banks. The literature review suggests that there is little evidence (Fraser, 2005, 2008; BBA, 2002; Dhaliwal, 2006) to support the reported perceptions of discriminatory practices.

2.6.1 Key Points from Literature Review

This literature review highlights a number of key points:

1. Lack of data on EMBs generally and BACEs in particular is a major problem and evident in the efforts in presenting accurate information in terms of representations in London. Estimates are often derived from data on the wider SME population in London. Very limited reliable data on BACEs in London are available

2. The reasons why BACEs face disproportionate barriers accessing debt finance is not clear-cut, based on the literature. Research reports consistently report that BACEs are not particularly disadvantaged in accessing business finance when compared to other similar groups; however, there are suggestions that some specific ethnic groups experience disproportionate barriers, when compared to the white counterparts and other similar EMBs with similar features apart from ethnicity. There is very limited literature on the causative factors for explaining these ‗disproportionate barriers‘.

3. The influence of appropriate qualification is seen as useful in enabling business owner managers make sound judgements and develop good business cases. The correlation between the type of education (such as financial education) and management experience is considered to be a key issue. However, there is currently little empirical evidence to reaffirm its significance in ensuring that the business owner manager, irrespective of personal characteristics such as ethnicity, is advantaged in securing finance from external sources.

4. Banks who base their judgements purely on business profiling claim that risky ventures like the ones in which BACEs congregate are ‗too risky‘ for investment and profitability. However, literature also suggests that the knowledge they (the banks) have of these groups is poor and may be missing out of the investment opportunities BACEs can offer.

5. The literature on the provider side tends to be well balanced, ruling out discrimination when assessing loans applications. The OFT (1999) suggest that the processes of assessing risk make it unlikely that ethnicity could be a

factor during evaluation of loans applications. In other words, market rationality is built into computer programmes and the exclusion of the applicants for financial and banking services on the grounds of ‗race‘ or ethnic origin would have been contrary to the profit-maximisation strategies of High Street banks.

6. Literature suggests that well qualified EMBs enter self-employment because they experience discrimination in the labour market and supposedly face promotional barriers and the ‗glass ceiling‘ effect. Therefore, the subject of attitude is entrenched within these groups due to a range of wider institutional barriers facing ethnic minorities in general. The measure of attitudes is relative, but there is little research focusing on this concept. 7. The lack of data on EMBs in general appears to be a key problem as most

research tends to focus on the wider SME population. Very little research is focused on BACEs specifically and hence the gaps in offering explanations of the underlying issues affecting these groups and their low propensity to access formal sources of finance successfully. The true picture in terms of numbers is a key challenge and therefore, targeted policy measures may be ineffective.

8. Attitudinal behaviours and actions of BACEs appear to influence how they seek finance and business support, for example, many do not seek debt finance and presume they would be denied. In the same token, many do not seek formal sources of business support and advice, and they pre-judge that the services on offer does preclude their needs without even trying or in many cases, they do not appreciate the benefits of it. There are a number of gaps needing more focus, some of the key areas to be investigated include the absence of targeted business advice support that are of a ‗specialist‘ nature. Mainstream support services appear to be ineffective and therefore many BACEs in the ethnic enclaves may be reluctant to seek professional business support, mainly because the advice available did not address their needs.

The gaps found in this review of literature can be associated to a lack of sufficient qualitative research and lack of insider accounts from BACEs studies. The triangulation approach adopted in this study drawing upon the perspectives of three principal agents therefore endeavours to advance our understanding of the reasons why BACEs experience particular difficulties in accessing external finance and seeking related business support.

3. RESEARCH METHODOLOGY