Small and medium-sized enterprises (SMEs), firms with fewer than 500 employees, are the backbone of U.S. economy and employment. 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. America’s 28 million SMEs account for over half of U.S. non-farm GDP. SMEs are also prominent in exports: SME exporters represent 98 percent of all U.S. exporters and about 35 percent of U.S. export revenue.
To grow and contribute to the U.S. economy and exports, SMEs need access to free cash flow and credit. Academic studies show that financing is the single most robust determinant of firm growth.[i] However, small firms consistently report higher financing hurdles than large enterprises given their small size, limited assets, and general inability to raise funds through credit markets or publicly traded equity. Given that SMEs tend to have greater volatility in earnings and growth than do larger companies, they are seen as riskier investments, and thus subject to higher cost of capital.[iii] In addition, with limited staff and time, SMEs have high opportunity costs to cultivate relationships with lenders and investors, or to diversify these relationships so as to shop around for the best deal.
Nextrade Group works on SME finance in various ways, such as by analyzing the state of export finance for SMEs, and preparing an annual White Paper on the state of SME finance in the U.S.
Expanding SME export finance in the United States Read here
SME exporters as a new asset class Read here
Accelerating access to finance for Latin American SMEs Read here
State of SME finance in the U.S. in 2014: read our white paper Read here