Small Businesses Face Uneven Access to Finance Amid Global Economic Uncertainty

Global SME financing is recovering slowly but remains constrained by high borrowing costs, uncertainty and reduced long-term investment. While new funding channels like fintech and venture capital are growing, access to finance is still uneven, keeping many small businesses cautious.

The global financial system is showing signs of improvement, but for small and medium-sized enterprises, the recovery remains uneven. A new OECD Scoreboard, developed with support from institutions such as the European Central Bank and European Investment Bank, reveals that while borrowing conditions are slowly easing, SMEs still face major hurdles in accessing finance.

Across 48 countries, the report highlights a key reality: the post-pandemic recovery in SME finance is fragile. Interest rates have started to fall, and credit is slowly returning, but uncertainty in the global economy continues to hold businesses back. For many small firms, the environment remains cautious rather than confident.

Growth Holds, But Uncertainty Remains

The broader economic picture explains why SMEs are hesitant. Global growth has remained stable, supported by trade and rising investment in sectors like artificial intelligence. However, risks are increasing. Geopolitical tensions, trade disputes and volatile energy prices continue to create uncertainty.

Inflation has come down in many countries, but not everywhere. As a result, central banks are moving at different speeds when adjusting interest rates. This mixed environment makes it difficult for small businesses to plan ahead. Even when borrowing becomes slightly cheaper, many firms are unsure whether it is the right time to invest.

Lending Is Returning, But Slowly

Bank lending to SMEs has started to recover, but only modestly. After a decline in 2023, new loans increased slightly in 2024. However, lending levels are still below what they were before the pandemic in many countries.

More importantly, the total amount of loans held by SMEs has stopped growing. Many businesses are focusing on repaying old debts rather than taking on new ones. This shows a clear shift in behaviour: instead of expanding, SMEs are becoming more cautious and protecting their finances.

Investment Takes a Back Seat

One of the most worrying trends is the drop in long-term loans. These loans are typically used for expansion, innovation and major investments. Their decline suggests that SMEs are delaying big decisions.

Faced with uncertainty, rising costs and stricter lending conditions, many businesses are choosing to wait. Instead of investing in new equipment or growth plans, they are focusing on staying stable. Over time, this could slow productivity and limit economic growth.

Tougher Credit Conditions Persist

Although interest rates have started to fall, they are still higher than before the pandemic. At the same time, banks are asking for more collateral, making it harder for SMEs to secure loans. This is especially challenging for newer or innovative firms that may not have strong physical assets.

Interestingly, loan rejection rates remain low. But this does not mean access has improved. Instead, many SMEs are simply not applying for loans at all, discouraged by high costs and strict requirements.

New Finance Options Are Emerging

As traditional bank lending struggles, alternative finance is becoming more important. Venture capital is slowly recovering, but most of the investment is going into artificial intelligence companies. This means many SMEs are still left out.

At the same time, financial technology is growing rapidly. Fintech platforms are offering faster and more flexible financing options, using digital tools and data to assess risk. These services are helping SMEs access funding more easily, especially those that might be overlooked by traditional banks.

Warning Signs Are Appearing

Despite some improvements, risks are building. In several countries, business bankruptcies have risen above pre-pandemic levels. Non-performing loans have also increased slightly in some areas.

These trends suggest that while the system is stabilising, many SMEs remain vulnerable. The end of pandemic-era support and ongoing economic pressures are beginning to show their impact.

Governments Step In With Targeted Support

Governments are adapting their policies to support SMEs. Traditional tools like loan guarantees and direct lending are still widely used, though on a smaller scale than during the pandemic.

More recently, support has become more targeted. Many countries are focusing on start-ups, innovative firms and businesses affected by global trade issues. Governments are also promoting green investments and digital transformation, helping SMEs adapt to changing economic demands.

The Road Ahead

SME finance is clearly changing. The traditional reliance on bank loans is giving way to a more diverse system that includes venture capital, fintech and new financial instruments.

However, the transition is not complete. Many small businesses still struggle to access the funding they need. Going forward, the challenge for policymakers will be to ensure that SMEs not only survive but also invest and grow.

In a world filled with uncertainty, helping small businesses secure reliable and affordable finance will be key to building stronger and more resilient economies.