<P> SME finance is the funding of small and medium - sized enterprises, and represents a major function of the general business finance market--in which capital for different types of firms are supplied, acquired, and costed or priced . Capital is supplied through the business finance market in the form of bank loans and overdrafts; leasing and hire - purchase arrangements; equity / corporate bond issues; venture capital or private equity; asset - based finance such as factoring and invoice discounting, and government funding in the form of grants or loans . </P> <P> However, not all business finance is external / commercially supplied through the market . Much finance is internally generated by businesses out of their own earnings and / or supplied informally as trade credit, that is, delays in paying for purchases of goods and services . </P>

What is the meaning of sme in banking