Small and medium enterprises (SME) continue to face challenging financing conditions with borrowing costs well above pre-COVID levels and new lending volumes remaining 20% lower than 2019 in real terms, according to a new OECD report published in August 2026.

The financing squeeze is intensifying as lenders demand greater security from SME borrowers. The share of small businesses required to provide collateral jumped 5 percentage points to reach 53% in 2024, while SME loan stocks remained below 2019 levels in 23 out of 38 countries surveyed.

Equity financing growth has become highly concentrated in artificial intelligence ventures, which accounted for 51% of total global venture capital deal value by mid-2025, up from 37% in 2024. Other alternative financing options including factoring and leasing showed mixed performance across different markets.

The OECD recommends governments support broader financial instruments and expand venture capital access beyond AI deals. Fintech solutions are emerging as a key opportunity, with embedded finance growing three times faster than traditional direct lending over the past decade as more fintech firms target SMEs as primary customers. This financing gap threatens SME investment capacity and broader economic competitiveness as prolonged uncertainty weighs on the backbone of most economies.