Innovations in access to finance for SMEs

This paper reviews a broad range of innovations in business financing and highlights examples of good practice in developed and emerging economies.


In the years since the 2007–8 financial crisis, the issue of access to finance for small and medium-sized enterprises (SMEs) has taken on a new prominence, having been formally recognised as an issue of pressing importance at the G20 summit in Pittsburgh in September 2009. Of course, one of the key reasons for the increased attention that this subject now receives is the well-documented problems of the banking system in many parts of the world following the ‘credit crunch’ of 2008–9. This dimension of the financial crisis – and the policy and regulatory measures subsequently put in place – has had a notable effect on the ability and willingness of the conventional banking system to fund SMEs in some parts of the world, and has therefore contributed to the emergence of innovative alternative forms of SME finance. In other regions, a general lack of development in commercial banking and other sorts of financial infrastructure has been a more pressing issue.

Even so, other factors beyond the crisis of the developed world’s banking system have also contributed to the initiatives that this paper will discuss, notably technological developments and increasing access to online services; electronic data from a growing variety of sources; and innovative financial instruments and structures that together help to create new ways for savers and borrowers, investors and entrepreneurs, to meet and do business.

This paper provides examples of a range of important innovations in SME finance and discusses some of the lessons we can draw from them. Although the definition of an SME varies widely across different markets, for the purposes of this report a small enterprise is considered to be a company with 50 or fewer workers and a medium-sized enterprise is any business with 51 to 249 workers. In common with other definitions of SMEs, this excludes companies in extractive industries, utilities and financial services.