Did you know that small and medium-sized businesses face a $5.2 trillion annual funding gap? That’s roughly 1.5 times the size of the existing lending market for this segment! (source: McKinsey)
What’s more, there are huge differences between business financing in Europe and the U.S. and Europe is falling behind.
Europe vs. USA: Access to financing
- Different role of banks: While European companies rely on bank loans for up to 70% of external financing, in the U.S. it’s only 40%.
- Lack of venture capital: European companies have much more limited access to investment. The volume of venture capital in the U.S. is 5 to 7.5 times greater than in Europe.
- Fewer innovative tools: The U.S. market offers a wider range of alternative financing options, while European companies remain mostly dependent on traditional bank products.
Consequences for European business
- In Europe, one in four smaller businesses struggles with financing.
- Small companies face, on average, twice as many barriers as large enterprises.
Why is it worth looking beyond traditional bank financing?
There are several advantages. Alternative financing options offer:
- Greater flexibility in terms
- Faster approval processes
- Lower collateral requirements
- Digital workflows
