Market forecasts for SME finance point to a 6.3% revenue growth in FY2024, driven by digital lending adoption and easing inflationary pressures. Traders are watching mid-cap lenders for breakout patterns in price charts. Helen Lumb, managing director and chief financial officer at Shire Leasing remarks, in relation to the NI increase, that “access to asset financing as an alternative form of borrowing may be key to enabling planned investment for growth, against a backdrop of this unexpected and unbudgeted additional cost.” Today, capital-market financing for SMEs is almost non-existent in most EMDEs. Capital markets have more significance for SMEs in High-Income Countries (HICs) and a few EMDEs. For example, in Italy, Peru, and Brazil, capital markets are becoming an alternative source of direct-debt financing for SMEs through instruments such as minibonds and credit funds. In many HICs, capital markets are the key source of financing for start-ups through venture capital and, for growing firms, through private equity. In selected jurisdictions, such as China, Poland, and the Republic of Korea, SME exchanges are an important component of the equity financing ecosystem. In addition, in countries like Brazil and Malaysia, fintech solutions, in particular crowdfunding platforms, have been expanding rapidly, supporting both debt and equity financing for SMEs. Finally, capital markets are also supporting lenders improve their funding conditions through instruments such as plain-vanilla bond issuances and in more developed markets, through SME securitization. This, in turn, enables lenders to expand their outreach to SMEs. Broker surveys suggest SME finance dividend yields will average 2.1% this year, appealing to income-oriented investors amid stable credit conditions.
