UN puts MSME finance gap back in focus as small firms face higher trade costs

The United Nations has put access to finance for micro, small and medium-sized enterprises back in focus, warning that many smaller firms continue to face serious barriers to funding, infrastructure and market access.

The issue was highlighted at a UN High-Level Political Forum side event on 6 July, focused on empowering MSMEs through innovation and sustainable industrial development.

The UN said MSMEs account for around 90% of businesses worldwide, generate 60% to 70% of employment and contribute about 50% of global GDP. Despite that role, many smaller businesses still struggle to access loans, operate under difficult market conditions and manage rising costs linked to supply chain disruption, climate pressure and digital change.

The finance gap is directly relevant to trade and working capital markets. Smaller firms are often the first to feel the effect of longer payment terms, higher import costs and reduced bank appetite. They also tend to have less collateral and weaker access to formal credit than larger companies.

Trade finance, invoice finance and supply chain finance can help address part of that gap by linking funding to receivables, purchase orders or approved buyer obligations rather than relying only on the borrower’s balance sheet.

The UN also pointed to digital technologies, artificial intelligence and green innovation as potential tools for increasing MSME productivity and resilience. But those benefits depend on access to affordable finance and digital infrastructure.

For lenders, development finance institutions and fintech providers, the message is clear. MSME finance is not only a domestic lending issue. It is central to trade resilience, supplier liquidity and inclusive growth.

The challenge is designing finance that reaches smaller firms without increasing risk beyond acceptable levels. That is likely to keep receivables-based finance, digital onboarding, risk-sharing structures and alternative credit data at the centre of MSME finance discussions.