Closing the Gaps: New report on alternative finance strategies for providing SGB finance
Small and growing businesses (SGBs) are key drivers of inclusive growth in emerging markets. We know that one of their biggest challenges is finding timely and appropriate finance to fund their business growth. A new report, ‘Closing the Gaps: Finance Pathways for Serving the Missing Middles‘ sheds light on how finance providers are aiming to address SGB finance needs. The report, released by the Collaborative for Frontier Finance, offers up five pathways for providing alternative finance that starts to address the diverse needs of each SGB segment and capital provider.
The five pathways range across the spectrum from pure equity to pure debt. Some are highly customised, and others are highly standardised.
These five finance pathways address the varied finance needs of each enterprise family.
A key learning for Small Foundation in this report was that there is a high prevalence of the more standardised and higher volume Systematize and Digitize approaches addressing the SGB segments that have critical finance gaps. This is especially true for debt provided to Livelihood-Sustaining Enterprises and Dynamic Enterprises, where there is a critical unmet need for finance.
The report includes suggested actions that ecosystem stakeholders (investors, entrepreneurs, donors and others) can take to help support the expansion of SGB finance. Small Foundation supported the development of this report along with Argidius Foundation, Triple Jump and the Dutch Good Growth Fund and the Omidyar Network. We encourage you to discover more in the report itself.