1. World problems
  2. Lack of credit facilities for small and medium enterprises

Lack of credit facilities for small and medium enterprises

Nature

Despite their vast numbers, Small and Medium Enterprises (SMEs), have traditionally had difficulty in accessing formal credit, particularly long-term finance. The key reasons for this are well known: SMEs are considered high-risk undertakings due to their insufficient assets and low capitalization, vulnerability to market conditions and high failure rates; in many countries, banks are biased in favour of large corporate borrowers or public-sector entities; information asymmetry arising from SMEs' lack of accounting records and other financial documentation makes it difficult for banks to assess the creditworthiness of potential SME borrowers; and the high administrative costs of lending small amounts generally do not make SME lending a profitable business for banks.

Broader

SDG

Sustainable Development Goal #9: Industry, Innovation and InfrastructureSustainable Development Goal #17: Partnerships to achieve the Goal

Metadata

Database
World problems
Type
(E) Emanations of other problems
Subject
Content quality
Presentable
 Presentable
Language
English
Last update
Oct 4, 2020