SMEs Financing: Current State of Play and a Glimpse into the Future

The main objective of this Chapter is to discuss our current understanding of the SMEs financing area and to provide some future insights. The Chapter starts from the recognition that the SMEs financing field is a relatively new area, mainly developed during the last two decades. It then builds around our admission that there is no universal theory of capital structure, so that the SMEs financing question should be dismantled into different approaches. In this context, the Chapter first presents the main sources of business finance and then discusses the main categories of financing determinants for SMEs. Next, it explores the interesting question whether SMEs can actually choose among the various financing sources, thereby further elaborating the issue of financing constraints. The Chapter ends by risking a glimpse into the possible future states of SMEs financing, looking at issues like financial technology and financial inclusion/exclusion.