A recent report by Asian Development Bank (ADB) Brief said that Small and Medium Enterprises (SMEs) face the greatest obstacles in accessing affordable trade financing. Globally, 57% of trade finance requests by SMEs are rejected, against just 10% for multinational companies.
High rejection rates lead many firms to turn to inefficient informal financing.
Financial technology, or Fintech, can help bridge the financing gap for businesses left out of trade finance, according to the brief. But awareness of digital finance by small businesses remains low, with 70% of responding companies indicating that they are unfamiliar with these tools. Among firms that were familiar with digital finance, peer-to-peer lending had the strongest uptake rates in developing countries.
“The growth of the trade finance gap in 2015 continues to be a drag on trade, and small- and medium-sized enterprises are the most affected”, said Steven Beck, Head of ADB’s Trade Finance Program.
Since 2009, ADB’s Trade Finance Program has supported more than 8,200 SMEs across the region, with about 11,800 transactions valued at over $23.6 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
Source: Business Standard
Image Courtesy: banco.az
