Small and medium-sized enterprises (SMEs), firms with fewer than 500 employees, are the backbone of U.S. economy. They make up 99 percent of all firms, employ over 50 percent of private sector employees, and generate 65 percent of net new private sector jobs. SMEs account for over half of U.S. non-farm GDP, and represent 98 percent of all U.S. exporters and 34 percent of U.S. export revenue.
To thrive, SMEs need access to credit and cash flow. Credit conditions for U.S. SMEs deteriorated in the wake of the financial crisis, and are expected to continue depressed as Basel III capital adequacy requirements come into effect in 2015. Early-stage companies seeking equity finance have also faced challenges, as venture capital is increasingly focused on later-stage companies and available only to a handful of firms.
What is the state of SME finance in the United States today, five years after the financial crisis? This Nextrade Group white paper provides answers. We review trends in lending and equity financing to SMEs, discuss emerging financing sources for SMEs, and assess the future of SME finance in light of the rise of alternative, online lenders and crowdfunding. We will also analyze the specific financing issues faced by SMEs that seek growth through exports.
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