Whether you work with one SME or hundreds, you will undoubtedly face some type of risk or challenge that will impair your ability to service their loan demands or generate enough cash flow from them to sustain your business. As a result, lenders must pay close attention to what makes SMEs appealing to borrowers (such as their speed of growth, low capital requirements, and so on), as well as potential pitfalls (such as demanding penalties if targets are not met).

Risks and Challenges

When it comes to lending money to SMEs, it’s critical to understand the risks. Loan defaults, adverse macroeconomic conditions, and changes in credit markets are examples of such risks.…