Explain what sources of finance are available for small to...

Explain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance 1. Introduction The SME (Small and medium enterprise) sector is one of the crucial important contributor to economic growth in terms of Gross Domestic Product(GDP) and job creation worldwide(IFC,2010). According to OECD(2006), SMEs had created more than sixty percent of the job opportunities for OECD countries. That situation for developing counties are even more obvious. There is no doubt that the development of SMEs is closely linked to national economy. The growth of SME sector, however, presents a stalled tendency, even recession situation, owing to the deficiency of accessing to†¦show more content†¦It includes trade credit, public debt, bank financing as well as nonbank financial institution debt. Unlike equity financing which would dilutes the owners equity, and consequently, may partly deprives the owner of control of the firm. (Abdulsaleh Worthington, 2013). Debt financing would be a proper approach for SMEs owners to maintain full proprietorship as well as management(Abdulsaleh Worthington, 2013). 2.3.1 Trade credit According to Garcà ­a-Teruel Martà ­nez-Solano (2010), trade credit is a paying agreement which made by seller and buyer, that allow the buyer to,in a specified period, make a deferred payment after the good or services having been provided. In this way, small firms would have a relatively short-time to arrange its cash flow and eventually overcoming shortage of cash or funds. Moreover, trade credit would be a substitution when other financing techniques unavailable. That is to say, small and medium firms will gain their opportunity of survival. 2.3.2 Non-bank financial institution debt Non-bank financial institution’s(NBFI) role of lending is similar as bank financing to a certain extent, their biggest differences are the mode of borrowing audition and the length of the loan terms. Generally speaking, the loans of NBFIs are longer than the duration of the commercialShow MoreRelatedExplain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance2495 Words   |  10 Pagesfinancing sources for SMEs 4 1.1 Different stages in raising finance 4 1.2 Venture Capital: a light of hope for the SMEs 5 1.3 Leasing and Factoring: special survival skills 7 2 Difficulties for SMEs in raising finance 8 2.1 Biggest trouble: lack of credit records 8 2.2 Capital constraints 9 2.3 Other barriers 10 3 Conclusion 10 Reference 11 Explain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficultiesRead MoreChapter 134543 Words   |  19 Pagesmarkets D. Language E. Country specific technical standards 2. In the United States, what percent of firms export, according to the U.S. Small Business Administration? A. Nearly 98 percent B. 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