The impact of the global financial crisis on small and medium enterprises financing

Abstract The importance of the SME sector is recognized worldwide. The contribution of this sector is particularly important for the achievement of several socio-economic goals such as employment generation, contribution to national production and exports, and encouraging entrepreneurship. However, the access of SMEs to financial resources is rather limited. Financing has been a problem that troubles SMEs for a long time, which restrains them from sustainable development and international competitiveness in the long run. As a result, a common challenge for all governments and financial institutions address the questions: how to provide enough financial support to SMEs, facilitate access to the necessary finance, how to innovate financing pattern and promote their sustainable development. Nowadays, the problem of financing SMEs is further exacerbated as a result of serious financial and economic crises facing the world economy. The current global economic crisis has resulted in capital depletion, risk aversion and credit contraction. Since the financial market can not function properly as a source of funding, and the credit crisis continues to increase pressure on the cost of financing, companies are now left with virtually no access to finance, which seriously undermines their survival and development. In the case of small and medium enterprises, the situation is even worse. Many small and medium enterprises will be forced to go bankrupt, due to lack of finance. Therefore, financing of SMEs is a pressing issue for all economies, particularly developing economies, like ours. Key words: financial crisis, SME, problems, financin