Small and medium-sized enterprises (SMEs) are widely regarded as the backbone of economies around the world. Their contribution to gross domestic product and exports is unique and they employ a greater share of populations than many bigger enterprises, globally and in Asia. In this region, they typically comprise more than 90% of enterprises and contribute immensely to job creation and exports.

Yet, SMEs face multiple challenges in gaining access to finance that can fuel their growth, for many reasons.

Several issues stand out and are discussed in this publication. Broadly speaking these include (i) that lenders perceive SMEs as risky borrowers engaged in less-than-desirable organizational practices, and (ii) that such firms face regulatory bottlenecks and financial system structures in the developing countries in Asia and the Pacific that hinder their access to finance.

The publication explores these challenges and the role that credit guarantee schemes (CGSs) can play in mitigating them, especially during crises.