[fusion_text]It is estimated more than 95 per cent of businesses across the world are small and medium-sized enterprises (SMEs), accounting for approximately 60-95 per cent of private sector employment and, on average, 52-95 per cent of a country’s private sector contribution to GDP.

Despite their importance to the growth of economies, SMEs face a number of hurdles when seeking finance. Banks, the traditional provider of loans, are increasingly focused on financing larger companies, meaning there is a lack of affordable funding options for the SME market.

The International Finance Corporation (IFC) estimates that the current SME funding gap in global emerging markets is more than $2 trillion (Dh7.35 trillion) (approximately $260 billion in MENA).

This considerable funding gap between the demand and supply of capital is driving a critical need for alternative finance solutions to fuel growth in this underserved sector of the economy. Two solutions that are rapidly gaining popularity due to their attractive cost, accessibility and flexibility, are equity crowdfunding and peer-to-peer (P2P) finance.

While they are both built on the power of the ‘crowd’, it is important to understand there are fundamental differences, which suit different types of companies. To determine which is the most suitable for your business, you need to be clear about what stage it is at, the amount of funding required, what the capital is to be used for, how long you need the finance for and how soon the funding is needed.

Making the wrong decision can put your business at risk of legal action, bankruptcy or even takeover by lenders.

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