Global tradereached a record $35 trillion in 2024, according to UNCTAD. More than 90percent of that trade depends on some form of external finance. On paper, thesystem looks large and liquid.

In practice,many SMEs experience the opposite.

The AsianDevelopment Bank estimates the global trade finance gap at $2.5 trillionin 2026, as reported by Reuters. Rejection rates for SME trade financeapplications remain elevated, particularly in emerging markets where theyfrequently range between 30 percent and 45 percent, and in some low-incomeeconomies exceed 50 percent.

Thecontradiction is stark: record trade volumes, yet rising financing constraints.For exporters and importers operating with thin margins and long paymentcycles, this tension defines today’s operating environment.

1. Record Trade, Structural Financing Constraints

The expansionof global trade over the past decade has not been matched by an equivalentexpansion in accessible financing for SMEs.

Severalstructural factors explain the mismatch.

Banks facehigher capital requirements under Basel frameworks. Compliance obligationsaround KYC and AML have increased materially since the financial crisis.Cross-border transactions, especially in certain jurisdictions, triggerenhanced scrutiny. Processing smaller deals often generates lower returnsrelative to compliance costs.

A $300,000receivables transaction for an SME may require similar onboarding effort as amulti-million-dollar facility for a large corporate. From a bank’s internalperspective, prioritizing larger clients is rational.

From an SME’sperspective, it is exclusionary.

This divergencebetween institutional incentives and SME needs is one of the core drivers ofthe widening trade finance gap.

2. Why Rejections Are Rising

Trade financerejections are not always a reflection of weak transactions. Often, they stemfrom how risk is assessed.

Banks typicallyunderwrite the corporate borrower. If the SME’s balance sheet appears thin, ifretained earnings are limited, or if leverage ratios are above internalthresholds, the application may be declined regardless of the quality of theunderlying trade.

Threestructural dynamics reinforce this trend

1. Capital efficiency pressure: Banks optimize for return on regulatory capital, which favors larger exposures.
2. De-risking strategies: Some institutions have reduced exposure to specific countries or sectors.
3. ‍Operational cost inflation: Compliance and monitoring costs have risen, making smaller tickets less attractive.

For SMEs, theresult is frustrating. A profitable exporter with strong buyers may still bedenied financing because the underwriting framework focuses primarily on thesupplier’s own financial metrics.

The rejectionis therefore not necessarily about the transaction. It is about the borrowerprofile.

3. The Real Cost of Being Declined

A rejectedapplication does not merely delay a shipment. It can alter the competitiveposition of the business.

For exporters,the absence of receivables financing often leads to

• Slower production cycles due to cash constraints.
• Increased reliance on overdrafts or unsecured     short-term debt.
• Reduced ability to offer competitive payment terms.

For importers,limited access to structured finance can weaken supplier relationships. Involatile markets, suppliers increasingly favor buyers who can pay early orreliably.

Liquiditybecomes leverage.

In anenvironment characterized by tariff uncertainty, FX volatility, and longer B2Bpayment terms, working capital strain can escalate quickly. What begins as afinancing gap can evolve into operational fragility.

4. Rethinking Credit: Moving Beyond the SME Balance Sheet

A criticalmisconception persists among SMEs: that financing depends exclusively on theirown financial strength.

In traditionalcorporate lending, that assumption holds. In trade finance, the analysis can bedifferent.

 A receivable isa claim on a buyer. If the buyer is financially sound, the risk profile of thetransaction changes. The strength of the obligor matters.

SMEs canimprove financing outcomes by focusing on transaction-based credit elements:

• The creditworthiness of the buyer.
• A consistent history of payment between buyer and     supplier.
• Clear documentation of shipments and invoices.
• Diversification of buyer exposure.

Even when bothsupplier and buyer have limited financial depth, a stable, documented trackrecord of timely payments can reduce perceived risk.

The key is toshift the narrative from corporate balance sheet weakness to transactionreliability and obligor quality.

5. Alternative Lenders: Opportunity, With Caution

As banksretrench, non-bank lenders have expanded their presence in trade finance.

Private creditfunds, fintech platforms, and specialized trade finance providers now offerreceivables financing, supply chain finance, and short-tenor working capitalsolutions. The global factoring market continues to grow, reflecting demand formore flexible liquidity tools.

 However, notall alternative lenders are created equal.

Some rely onaggressive pricing. Others impose recourse structures that transfer risk backto the SME. Certain platforms prioritize speed over robust risk assessment,which can create instability if funding sources shift.

SMEs shouldevaluate alternative lenders along several dimensions:

• Is the financing non-recourse or recourse?
• How transparent are pricing and fees?
• What is the onboarding process and timeline?
• Are funding limits scalable as trade volumes grow?
• Is there a stable capital base behind the platform?

The objectiveis not simply to secure liquidity. It is to secure reliable liquidity.

6. Incomlend’s Model: Structured, Non-Recourse, Scalable

In thisevolving landscape, specialized trade finance platforms can fill the structuralgap left by traditional banks.

Incomlendfocuses on short-tenor, non-recourse receivables financing. The underwritingframework centers on the transaction and the buyer’s credit profile rather thansolely on the SME’s balance sheet.

The modeloffers several structural advantages:

• Non-recourse financing: Risk of buyer     non-payment is transferred, subject to structure and due diligence.
• Efficient onboarding: Digital processes reduce     administrative friction.
• Higher limits: Facilities can scale with     growing trade volumes.
• Cross-border capability: Designed for     exporters and importers operating internationally.

For SMEs facingrepeated rejections from banks, the shift from balance-sheet lending totransaction-based financing can be transformative.

The focusbecomes the quality of the trade, not just the size of the supplier.

7. Strategic Implications for SMEs

The tradefinance environment is unlikely to revert to its pre-crisis structure.Regulatory burdens are entrenched. Capital allocation discipline remainsstrong. Geopolitical tensions continue to influence risk models.

SMEs that adaptwill gain advantage.

That adaptationinvolves:

• Diversifying funding sources.
• Structuring financing around receivables and buyer     credit.
• Prioritizing non-recourse solutions where     appropriate.
• Viewing liquidity not as a defensive necessity, but     as a growth lever.

In a $35trillion global trade economy, access to working capital determines whetheropportunities are captured or missed.

The harshreality of SME trade finance is that rejections are rising and the gap is large.Yet within that constraint lies opportunity.

Capital has notdisappeared. It has shifted.

SMEs thatunderstand how to navigate this new structure, and who partner with lendersequipped to assess transactions rather than just balance sheets, can convertstructural headwinds into strategic advantage.

Ininternational trade, resilience is built on liquidity. Those who secure itintelligently will remain competitive, even as the financing landscape growsmore demanding.