There is a significant issue facing small businesses.
The term “missing middle” describes the disparity in the availability of financial services and assistance for small and medium-sized businesses (SMEs).
These companies appear to be stuck in a bind since they are too large to be eligible for microloans yet too tiny to be eligible for standard bank loans. Consequently, the World Economic Forum reports that 67% of SMEs globally are struggling to survive.
With varying degrees of success thus far, several global financial institutions—the World Bank foremost among them—have endeavored to bridge the funding disparity.
This is true even though a two-pronged strategy was implemented, helping to increase SMEs’ appeal to investors and coordinating with financial institutions to increase lending.
However, the European Bank for Reconstruction and Development asserts that having a strong local presence in a given region that can effectively understand and satisfy the needs of SMEs is critical to the success of any international organization seeking to close the financial services gap in that country.
