New OECD report on Financing SMEs and Entrepreneurs
According to the Financing SMEs and Entrepreneurs 2017 OECD Scoreboard, lending volumes and credit conditions are improving for SMEs. However, demand-side obstacles such as the lack of financial knowledge are contributing to holding back a stronger recovery. Moreover, SME finance through non-bank instruments are still not sufficiently developed to meet the different needs of firms, and ensure resilience to changing economic conditions.
The sixth annual edition of the OECD Scoreboard highlights development in SME financing over the 2013-2015 period. Overall, lending to SMEs increased. SME interest rates are at record lows, and credit conditions generally remained accommodative.
Nonetheless, the recovery in SME lending is not running at full speed, held back by weak demand for credit. In a number of countries, demand for credit dropped in recent years, especially among micro-enterprises.
The OECD Scoreboard underlines the need to develop alternative financial instruments for SMEs that still face difficulties in accessing bank finance, in particular start-ups, young firms and very small enterprises.
A specific chapter of the report focuses on challenges which are limiting SME uptake of non-bank finance instruments and how to address them. On the demande side, many entrepreneurs lack financial knowledge, strategic vision, and the resources to attract alternative finance instruments. On the supply side, according to the report, potential investors are often dissuaded by the opacity of the SME finance market and a lack of investor-ready projects, along with regulatory impediments.
Financing SMEs and Entrepreneur2017: An OECD Scoreboard provides comprehensive data on debt, equity, asset based finance, solvency and framework conditions, complemented by an overview of policy measures to ease SMEs’access to finance in 39 countries.
