When it comes to the growth and development of the global economy, small and medium-scale businesses have a significant role to play. It is unfortunate that it is these minor concerns who are refused bank loans than their larger peers, and it becomes tough for them to open new lines of business credit for expansion or just for financing their operations. In the world, there is just a tiny volume of FinTech companies that help these companies with their business financing needs.
Kavan Choksi Singapore– the importance of small to medium-scale businesses for any nation
Kavan Choksi Singapore is an esteemed business expert known for his sound knowledge of finance and economics. According to him, it is these small to medium-scale businesses that account for seven out of ten employment opportunities for people in emerging global economies. They constitute about 90% of companies and over 50% of world employment. However, according to the reports released by World Bank, formal small to medium-scale companies contribute to about 40% of the national income or the GDP of emerging global economies.
The reports from the World Bank have estimated that there is a funding gap of about $5.2 trillion US dollars for companies that small, micro, and medium-sized businesses across the 65 million MSMEs across the 128 nations that were studied.
The problems that SMEs face today in their operations
It has been seen that small to medium-scale enterprises are less likely to receive bank loans than their larger business peers. It is due to this trend that they need to depend upon the funds that are generated in their companies. There is over 50% of the formal companies under this category need to get traditional modes of business credit.
The role of FinTech
He believes that FinTech companies can help SMEs by giving them the funds they need for their growth and expansion. These companies have the ability to understand the business model of these companies and help them with their internal operations. Fintech companies play a significant role in assisting SMEs to attain their short and long-term goals. They can step in and close the financial gap that these businesses face.
As per the CGAP, about two-thirds of the FinTech support in the world center around the UAE, Egypt, and Saudi Arabia- all of these nations have made attempts to boost the regulatory framework for Fintech firms.
According to Kavan Choksi Singapore, he believes that it is this lack of funds that halts the growth and the progress of small to medium-scale companies in emerging economies. He adds that banks refuse over 50% of the finance requests that come in from SMEs, and they are asked to offer some burdensome requirement or collateral for the loan. At the same time, these businesses struggle to open new lines of credit, and they are cash-strapped when it comes to delivering goods. They need to pay their suppliers fast, and this gives rise to problems in their cash flow.