Small and medium-sized businesses (SMEs) don’t ask for special treatment. They ask for a fair shot, and the ability to plan.
As the SME policy lead for the U.S. Chamber of Commerce, I get to spend a lot of time with SMEs and I hear a consistent theme: they’re stretched to the limit, and their most precious asset is time. Time to serve customers. Time to train and retain workers. Time to adopt new technology. Time to expand into a new market. Time to invest in their business, their employees, and their community.
When small businesses are forced to spend that time decoding shifting rules, navigating regulation, and figuring out how and whether they can access capital on terms that make sense, the cost is real. And it shows up in reduced hiring, delayed investment, and fewer “yes” decisions on growth.
That’s why the OECD’s new report is worth close attention. It documents a persistent, structural challenge for small businesses across nearly 50 countries: a credit environment that remains materially tougher than it was before the pandemic, paired with long-term uncertainty that discourages investment.
The takeaway for policymakers is not complicated: stability and certainty matter, and structural adjustments are urgently needed to unlock capital. And when we get policy wrong, when we introduce volatility into the rules of the road, we tax small businesses in the only currency they can’t borrow: time.
The Uncertainty Tax: When originating a loan becomes too expensive due to shifting rules and compliance burdens, lenders pull back, and “discouraged borrowers” stop applying altogether. The result: stagnant loan stocks, reduced investment, and fewer SMEs growing.
Addressing the structural baseline of SME capital costs
While short-term interest rate fluctuations often dominate the headlines, we must look at the deeper baseline. SME interest rates remain higher than before the pandemic. In other words, the lending environment is structurally more restrictive than what small businesses were dealing with just a few years ago.
Small business owners are willing to invest. They want to invest. But most won’t do it without confidence that next month and next year will be profitable enough to make that investment worth it. When capital costs stay elevated due to systemic constraints, “maybe” turns into “not yet.” A new piece of equipment waits. A second location stays on the whiteboard. A hiring plan gets trimmed from three people to one. And those decisions compound across an economy.
The “Discouraged Borrower” Problem Demands Structural Solutions
The Scoreboard also points to a pattern we should not ignore: application rates remain weak, even as rejection rates stayed low. That can sound contradictory until you consider the “discouraged borrower” effect: many small businesses simply choose not to apply because they assume they won’t qualify, don’t have time to go through the process, or don’t want to risk a rejection or new obligations amid uncertainty.
That aligns with what we hear every day. When regulatory burden and uncertainty are the dominant drivers, small businesses become more cautious, not because they lack ambition, but because prudence is how you survive.
And here’s the bigger economic risk: when the most responsible borrowers stop raising their hand, you don’t just reduce credit volume. You reduce investment, innovation, and competitiveness.
Closing the Long-Term SME Lending Gap
Aggregate new SME lending volumes (in real terms) remain 20% lower than in 2019 across reporting countries. And the stock of SME loans remained broadly stagnant.
That combination of fragile flows and stagnant stocks isn’t just a banking statistic. It is a signal about small business liquidity and capacity to invest. When small firms can’t access working capital smoothly, often due to rigid capital requirements that trickle down to community lenders, they can’t absorb shocks, they can’t pursue opportunity, and they can’t keep pace with competitors at home or abroad.
What the U.S. Chamber of Commerce is doing and what government can do to help
At the U.S. Chamber of Commerce, we devote significant resources to helping small businesses navigate and increase access to capital by building financial literacy, sharing best practices, and learning directly from small business owners about what’s working and what isn’t.
That work is especially important in a period like this, when the Scoreboard shows financing conditions remain tighter than pre-pandemic and borrowing decisions are shaped as much by structural uncertainty as by interest rates.
But education and peer learning are only part of the equation. Government policy plays an outsized role in whether small businesses feel confident enough to invest.
We consistently deliver the message to Congress and elected leaders around the globe to provide stability and certainty for SMEs who need that confidence to invest. We also urge regulators to eliminate outdated, duplicative, or unnecessary red tape that drive up costs and limit access to capital for lenders. When originating a loan or providing finance becomes too expensive for banks due to heavy compliance burdens, SMEs suffer from fewer sources for capital.
I am hopeful that readers and leaders will keep this important conversation about structural dimensions of SME access to capital going and join us at B20 USA starting November 9th in Washington, DC. To find out more about the B20 USA Summit, click here.
Find out more about the OECD report Financing SMEs and Entrepreneurs 2026
