Blended Concessional Finance for SMEs

Small and medium-sized enterprises (SMEs) form the backbone of emerging-economy labor markets, but they need targeted financing and tailored support to grow. 

One of the biggest challenges for SMEs in most emerging markets is a lack of access to finance, which limits their ability to invest in growing their businesses and hiring additional employees.

Although banks in some markets are starting to move into SME lending, some segments are still underserved. This includes SMEs in fragile and conflict-affected markets, women-owned businesses, education and health-care SMEs, and firms in rural markets.

SME blended finance facilities offer guarantees to lower the risks faced by financial institutions moving into SME markets. They also provide dedicated credit lines to reach specific segments — including women-owned SMEs — and performance incentives to motivate financial institutions grow their SME portfolios.

Global SME Finance Facility (GSMEF)

Focused on helping to close the financing gap faced by SMEs in emerging markets, the Global SME Finance Facility (GSMEF) is a global blended-finance partnership. GSMEF was launched in 2012 in response to a  G-20 call  for expediting SME financing and growth, and aims to generate one million new jobs in the SME sector. To support this growth, the facility provides investment, risk mitigation and advisory assistance to financial institutions. This helps institutions expand lending to the most underserved SMEs in challenging markets and segments, including SMEs in fragile countries, climate-smart SMEs, and women-owned SMEs. In addition, the Facility aids governments to improve their countries’ financial infrastructure, thus enabling capital to flow more efficiently to SMEs.

GSMEF is funded by the UK’s Foreign, Commonwealth & Development Office (FCDO) and the government of the Netherlands.

Expected Impact

From inception until FY 2025 IFC has leveraged Donors’ contributions of $155 million to crowd-in nearly $2.3 billion thereby encouraging financial institutions to make: