SME finance

Although there have been numerous schemes and programmes in different economic environments, there are a number of distinctive recurring approaches to SME finance.

[5] A substantial portion of the SME sector may not have the security required for conventional collateral based bank lending, nor high enough returns to attract formal venture capitalists and other risk investors.

In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring).

[7] At a workshop hosted by The Network for Governance, Entrepreneurship & Development (GE&D) in Geneva in July 2008, SMEs that fall into this category have been defined as Small Growing Businesses (SGBs).

[9] However, there are no evidence of any significant structural barriers to the supply of bank or private equity finance to suitable SME applicants on mutually satisfactory terms and conditions in Britain.

A common aim or feature of the viability based approach is the provision of appropriate finance that is tailored to the cash flows of the SME.

In 2008, a group of financial service providers and other stakeholders came together to form the Finance Alliance for Sustainable Trade (FAST).

Using such techniques – and also centralizing or rationalizing business-banking operations generally – can significantly reduce processing costs.

Standardized computer-based assessment may also be more accurate and fairer than reliance on the personal judgments of local bank managers.