Entrepreneurs come in all shapes and sizes, from the hip fintech startup, or family business on the high street to the home-based manufacturer using 3D printers and the power of the Internet to reach new markets.
Their financing needs vary wildly as well. But every entrepreneur will agree that cash flow is the lifeblood of any business. SMEs also need cash to fuel their growth— especially when they are scaling up or exporting to another market.
Consequently, financing is an important part of the SME ecosystem.
Traditionally, SMEs have relied heavily on debt financing, particularly through banks. This has made SMEs particularly vulnerable to banking system dynamics, with constrained access to financing arising in times of financial stress. This was starkly illustrated during the financial crisis of 2008-09, where the credit crunch significantly reduced access to capital for SMEs.
Since then, the landscape for SME financing has evolved significantly. Credit availability for SMEs has recovered, as interest rates have come down, credit conditions have improved, and payment delays have declined. In recent years, alternative sources of SME finance have also appeared on the scene: equity instruments, leasing and factoring, non-bank lending, and even fintech instruments like P2P financing and cryptocurrency offerings.
Despite this, SMEs have substantial structural disadvantages in obtaining financing compared to large corporations. These structural disadvantages arise mainly from limitations inherent to the small size and heterogeneous nature of SMEs, which also undermine the profitability of SME-related market transactions. Such structural limitations mainly manifest in terms of issuance costs disproportionate to the respective deal sizes, risk assessment, financial sophistication, reporting capabilities, and communication (particularly financial transparency). This coincides with financing gaps within the SME population: micro-enterprises, startups, and innovative ventures are likely to be underfunded despite the prevalence of venture capital.
SME FINANCING THROUGH BANKS
Bu hikaye SME Magazine Singapore dergisinin July 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye SME Magazine Singapore dergisinin July 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
Cloud- Driven Recovery
With digital transformation being an important catalyst for Malaysia’s inclusive economic recovery, cloud computing plays an important role that enables . the country to acquire the advantages that technology offers.
Live Werkz: Venturing Beyond Southeast Asia
Being forward-looking in its approach has enabled LiveWerkz Pte Ltd to survive the Covid-19 pandemic, says vice president Tricia Ng. Despite being a Singaporean company, the company does not focus its efforts in the Southeast Asia region. Instead, Greater China and the Middle East become the foundation for its businesses. Ng tells SME the company’s strategies in facing a challenging future.
Singapore's Go Digital Well Received
More than 78,000 of Singapore’s SMEs have participated in the country’s Go Digital programme since its 2017 launch, with more about 40,000 becoming participants last year, including 30,000 that received Covid-19 incentives from the government.
Accountants And SMEs: Creating A Sustainable World
For SME finance professionals, ‘sustainability’ is about achieving longevity. However, there is a confusion over different definitions of sustainability. They recognise the growing importance of tackling sustainability issues but lack the understanding of how doing this can be integrated into day-to-day practices within the finance function.
Rebuilding Our Mental Well-Being In Sales
Sue Barrett is a writer, training provider and entrepreneur who founded Barrett in 1995 to positively transform the culture, capability and continuous learning of leaders, teams and businesses.
Omicron: A Test Of Resilence
Global manufacturers have been facing a supply chain crisis since the start of the year. Just as it appeared that the situation was beginning to stabilise, the Omicron Covid variant reared its ugly head.
Silver Lining In The Cloud
Although RAS Security Pte Ltd’s business was adversely affected by the pandemic, there’s a silver lining in the cloud. The occurrence has necessitated the company to innovate its business model to remain viable and led to the discovery of new areas of security service provision. Managing director Tejdeep Singh shares his journey.
Accelerating Artificial Intelligence
Singapore is introducing two new public artificial intelligence (AI) programmes as part of the strategy to use technology for social and economic good, involving a total allocation of S$680 million to accelerate AI research. The latest initiatives require a funding of S$180 million.
Three Tips For Hiring Top Talents
BIG EGOS LOSE TALENTS First up, when it comes to hiring, you must put aside your ego.
The Economy Is Recovering, But What About People?
All signs are pointing towards a speedy recovery. Contrary to what this writer initially predicted, the economy seems to be genuinely recovering.
