Reference no: EM13480633

Write a Literature review of 1000 words that cover the topic of (study of SMEs and their access to finance)...

The objective of this proposal is to:

Therefore, the objective of this paper is to identify main barriers that prevent SMEs from accessing to sufficient finance:

The first obstacle that lenders considered in investing money in high return and lower risks operations instead of lending small scale activities. Lenders are slow to evaluate small and medium business borrowers where they often appeals to them as unreliable, unprofitable, and risky. SMEs may struggle to provide lenders with collateral of specific property to secure the repayment of a loan which considered as a major issue.

The second obstacle is that most of SMEs have a lack of loan securitization and information of asymmetry. Lenders need information of asymmetry and Intensive scrutiny of the business financial performance in making lending decisions to ensure the repayment.

Thirdly, most of small and medium enterprises suffer of the poor financial management which contributes in loan denial. The poor financial management has been affected by the quality of the SMEs work, productivity, profitability and their performance. Thus, SMEs are evolving in a poor position that cannot give the lenders the minimum information they generally required such as financial statements and legal document.

As far as lenders prefer to lend money for a high returns, they concerned on small and medium business locations which consider as the last barrier that must target a high economic area. Location is important to a business as it helps to get access to more customers and gaining more profit. In addition, SMEs stand out as high-risk clients for lenders due to the lack of business skills, experience, location strategies and resources.

Please find articles or books that related to this topic and objectives ..