11 Feb '11, 2am

Rocky Recovery for Small-To-Medium Enterprises | Young Upstarts: Collateral is here to stay. In most of the deve...

Rocky Recovery for Small-To-Medium Enterprises | Young Upstarts: Collateral is here to stay. In most of the deve...

Credit from suppliers is the most commonly used source of external finance among SMEs. In some countries, the flow of trade credit is twice as large as that of short-term bank lending. This gap is set to widen even more, as the chances of obtaining credit from a supplier are now much better than the chances of getting a new overdraft facility. The problem is that much of this credit flows from SMEs to other SMEs. Unlike (good) banks, SMEs in the real economy rarely have solid credit or collection policies in place and cannot afford to set aside capital against losses, so they end up taking substantial risks.

Full article: http://www.youngupstarts.com/2011/02/11/rocky-recovery-fo...

Tweets