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SMEs need better finance: OECD


SMEs must learn to tap into alternative sources of finance to realise sustainable growth, according to two new OECD reports. 

Recently released studies from the Organisation for Economic Co-operation and Development (OECD) – Financing SMEs and Entrepreneurs 2015: An OECD Scoreboard and New approaches to SME and entrepreneurship financing: Broadening the range of instruments – underlined the importance of SMEs to the economy.

“Small and medium-sized enterprises play a vital role in driving economic growth and creating jobs,  but access to finance for these firms will remain a challenge for years to come,” OECD secretary-general Angel Gurría said on the margins of the IMF and World Bank meetings in Washington D.C. “There is a pressing need to enable small businesses to diversify their funding sources by tapping alternative finance instruments.”

Constrained lending

Financing SMEs and Entrepreneurs 2015 finds that bank lending to SMEs has still not recovered to pre-crisis levels, putting the brakes on business growth and investment. Although credit conditions have generally eased, they remain tight, especially for SMEs.

New approaches to SME and entrepreneurship financing highlights the challenges of traditional bank finance for SMEs, in particular to newer, innovative and fast-growing firms with a higher risk profile. Companies in transition, perhaps those going through a change of ownership or control, face similar challenges.

Diversified funding sources for SMEs can better serve the needs of firms at different stages of development, with positive effects for the wider economy.

Our guide explains what alternative sources of finance your company could take advantage of and how to choose: www.switchmybusiness.com/articles/understanding-funding-options-for-small-businesses

To find out more about the OECD’s work on SMEs and entrepreneurship, please visit www.oecd.org/cfe/smes

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