Opportunities for Financing Small and Medium-Size Enterprises

September 2008

By Kevin Mellyn, Dr. Philip Lawrence and Helena Glebocki

Abstract

While the current credit crisis is putting enormous pressure on financial institutions, the financing of small and medium-sized enterprises (SME) can be a tremendous opportunity, with potential revenues of five trillion U.S. dollars globally. SMEs tend to have limited access to financing from their local banking system relative to their actual borrowing potential—a “financing gap”— making lending margins high relative to actual risk.

So why aren’t banks making the most of this market? It’s a complicated issue. For lenders, the global SME market is highly complex and difficult to serve cost-effectively compared to other market segments. However, this MasterCard Worldwide Centers of Commerce™ Insights report, Opportunities for Financing Small and Medium-Size Enterprises, gives financial institutions new insight on where to find the most fertile markets and how to evaluate factors for success for SME financing.

 

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