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Sources of finance

Sources of finance for small and

medium enterprises (SMEs)

SMEs tend to be unquoted and can have difficulty raising finance because:

 Small number of owners with limited capital available between them

 Lack of business history or proven track record

 lower level of public scrutiny over accounts and records

6.1 The funding gap

Unquoted SMEs may find they have an inability to raise funding without becoming
quoted. This may be bridged by using:

 business angels or venture capitalists

 government assistance

 supply chain financing, crowdfunding, peer-to-peer funding

6.2 The maturity gap

SMEs may find it easier to obtain long-term finance secured against their assets than
short or medium-term finance.

But for short to medium-term assets it would prefer to raise short to medium-term
finance to match the term of its assets against its liabilities and keep funding costs
down.

The inability to do this is known as the maturity gap.

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