Fintech to bridge $2 trillion SME funding gap - World Economic Forum

Fintech to bridge $2 trillion SME funding gap - World Economic Forum

Fintech startups in P2P lending and crowdfunding are set to play a key role in bridging a $2 trillion funding gap for millions of small businesses worldwide says the World Economic Forum.

The need for SME financing is widespread, says the WEF. The UK, Italy, Spain, the Netherlands, Turkey, Nigeria, Morocco, China, Canada and Argentina are among the dozens of countries worldwide where businesses indicate access to finance as a top three concern for doing business, notes the paper.

“Financing for SMEs is lacking although there is an ample amount of cash ready to get deployed”, says Michael Koenitzer, financial inclusion project lead at the World Economic Forum and Council manager. “But in this case fintech disruptors are increasingly filling the gap banks and investors leave.”

Referencing innovations in lending to small businesses, the WEF paper points to the arrival of new players in invoice and supply chain financing, equity crowdfunding and SME-to-SME loan packaging practices as a credible alternative to traditional bank lending.

“Small businesses account for more than half of the world’s GDP and two-thirds of all employment”, notes Peer Stein, director of finance and markets global practice at the World Bank Group. “If fintech can provide levers to help them succeed, we should create the right environment to make this happen.”

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