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Small and medium-sized enterprises (SMEs) are increasingly turning to alternative sources of financing, while new bank lending is declining in a number of countries. Many SMEs remain over-reliant on bank credit, however, and the take-up of instruments other than straight debt varies greatly from one country to another, according to a new OECD report. Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard shows that a rise in

venture capital investments and private debt to SMEs occurred in most participating countries in 2016, along with rapid growth in peer-to-peer lending, equity crowdfunding and invoice trading. The use of online alternative finance was especially high in China, the United Kingdom and the United States. Leasing, hire-purchase activities, factoring and invoice discounting, which are based on asset value rather than credit standing, also rose for a second consecutive year.
“Challenges persist in SME access to finance, but this visible growth in financing alternatives is very positive news,” said OECD Secretary-General Angel Gurría, launching the Scoreboard alongside Mexico’s Minister of Economy, Ildefonso Guajardo Villarreal, during the 
OECD SME Ministerial Conference 2018 taking place in Mexico City. “In any economy, small businesses are essential to innovation, competitiveness and inclusive growth. Providing reliable access to finance to such companies throughout their lives is crucial if they are to prosper and fully contribute to our economies and well-being.”
A continued decline in SME bankruptcies in 2016 pointed to improved business conditions. The Scoreboard found a median year-on-year drop of 6.5% in bankruptcies in 2016, following a drop of 6.9% in 2014 and 9.1% in 2015. Payment delays and non-performing loans also remained at relatively low levels in a majority of countries studied. SMEs are also benefiting from favourable credit conditions and low interest rates. The median value of the average interest rate charged to SMEs fell by 0.82 percentage points on the year.
Despite these positive developments, the report finds that new bank lending to SMEs fell in 15 out of 25 countries for which data were available in 2016, and the median value growth rate in new SME lending fell from 2.6% in 2015 to -5.6%. In addition, accessing appropriate sources of finance remains problematic for certain categories of small business, in particular micro-enterprises, young SMEs and start-ups, and innovative and growth-oriented ventures. Governments need to do more to foster both traditional and alternative financing instruments for SMEs, in line with the 
G20/OECD High Level Principles on SME Financing.
SMEs and entrepreneurs constitute the backbone of OECD economies, accounting for 70% of total employment and 50-60% of value added. They are key to strengthening productivity, delivering more inclusive growth and adapting to megatrends such as the new industrial revolution, the changing nature of work and demographic changes.





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