Daffodil International University Journal of Business and Economics, Vol. 2, No. 2, July 2007 Small and Medium Enterprises (SMEs) Financing Revisited: Lessons for Bangladesh Md. Alamgir Hossain Bhuiya * Md. Kamal Uddin * Abstract: Based on existing literature this paper provides a clearly conceptual framework for Small and Medium Enterprises (SMEs) financing in the global context. The conceptual framework has been organized in terms of some selected crucial aspects, such as: the financial institution structures; the lending infrastructures, and finally the lending strategies in using SME financing. The financial institution structures deals with the comparative advantages of different types of financial institutions. Here we focus mainly on the comparative advantages of large vs. small financial institutions; foreign-owned vs. domestically-owned institutions, and state-owned vs. privately-owned institutions in lending to SMEs. The lending infrastructure includes: the information environment; the legal, judicial and bankruptcy environment, and finally the tax and regulatory environments, all of which may directly or indirectly affect SME credit availability. Regarding lending strategies, we focus mainly on the core technologies such as: financial statement lending; small business credit scoring; asset-based lending; factoring; trade credit, and finally the relationship lending technology. We focus on the parts of the financial system that are most relevant to SME finance. We concentrate on the private debt markets that provide external finance to SMEs, and exclude discussions of the public equity and debt markets, which are generally beyond the reach of SMEsSmall and Medium Enterprises (SMEs) Financing Revisited: Lessons for Bangladesh 1. Introduction Small and medium sized enterprises (SMEs) are defined by the European Commission as independent enterprises that have fewer than 250 employees, and an annual turnover not exceeding E40/₤25 million or a balance-sheet total not exceeding E27/₤17 million (extract from the 96/280/EC, Commission Recommendation of 3 April 1996). In most part of the world, SME means organizations with up to 250 or 500 employees. In USA, SMEs are defined either by maximum number of employees, which varies from 100 to 1500, or maximum turnover per year, which varies from $0.75 to $30 million, or the amount of financial assets, that goes up to $150 million, depending upon the type of * The authors are Associate Professors, Department of Economics, Islamic University, Kushtia- 7003.