SME Financing Gap

SME Financing Gap

The International Finance Corporation (IFC) estimates that 65 million businesses, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year. That is equivalent to 1.4 times the current level of the global MSME lending (source). While the microenterprise finance gap is estimated at $718.8 billion, the SME finance gap makes up a larger percentage with $4.5 trillion in unmet demand.

The combined gap is equivalent to 19% of the GDP of the IFC’s 128 surveyed countries. Microenterprises outnumber SME’s 7-to-1, yet SMEs account for a larger percentage of the finance gap due to larger transaction volumes. Despite the distribution of volume between microenterprises and SMEs, the percentage of constrained enterprises within each segment is nearly identical.

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