Improving access to SME finance : Alternative financing approaches

Abstract

ABSTRACT Small and medium-sized enterprises (SMEs) are critical contributors to economic growth and job creation. The Covid-19 pandemic has reduced bank lending and affected SMEs. The lecture reviews the spectrum of alternative financing approaches for SME financing towards small businesses' establishment, growth and sustainability. Literature has shown that the expansion of SMEs enhances global economic growth, but these businesses face financing constraints at the start-up phase that hinder their growth and sustainability. They experience a high failure rate due mainly to a lack of startup and development funding. In this lecture, I investigate the challenges SMEs face when accessing finance, their role in economic development, traditional lending technologies, alternative SME funding approaches and the government’s response to these issues. Finally, the lecture discusses how the policy can influence the uptake of alternative financing approaches, enabling SMEs to establish and grow into sustainable entities in developing countries.