SMEs have certain advantages over large firms in terms of flexibility, speed of decision making, proximity to customers etc. In exploiting these advantages, SMEs make input factors available at higher quality or lower price, or create innovations on which consumer or other product downstream in the value chain may build. In other words: SMEs provide positive externalities to their surrounding (local or national) economy, complementing scale-intensive large firms. There are several reasons for low SME credit penetration, key among them being insufficient credit information on SMEs, low market credibility of SMEs (despite their intrinsic strengths) and constraints in analysis. This leads to sub-optimal delivery of credit and services to the sector.
