Small and Medium-sized Enterprises (SMEs) play a crucial role in keeping the global economy turning. SMEs account for around 90% of companies and more than half of the jobs worldwide according to the World Bank. However, it is often these SMEs that are underserved and lack access to affordable trade finance.

During a typical business transaction, the SME delivers goods and services and, at the same time, issues an Invoice to the Buyer. Payment terms range from 30 days to 90 days, and sometimes 120 to 180 days. These long payment cycles, especially for cross-border transactions, can place tremendous strain & pressure on working capital reserves.

Accessibility to trade finance is important since it allows SMEs to manage risk and liquidity challenges. Both importers and exporters face counterparty and currency risks while engaging in trade. This is even more pronounced for SMEs with limited resources. Further, there are long payment cycles especially for cross-border transactions, which can strain working capital reserves. While trade finance instruments address these challenges, a significantly large number of SMEs face obstacles in accessing them.

While they have traditionally filled the trade time gap, banks and financial institutions do not have the capacity to absorb the current growing trade finance demand due to increasing compliance constraints and regulatory requirements.