Why Capital Fails To Reach Growing SMEs And The Structural Gaps Holding Back Business Expansion

Kerryn Campion, COO at Aions Ventures | image supplied

That is the view of Kerryn Campion, chief operating officer at Aions Ventures, who argues that structural weaknesses across the funding ecosystem prevent capital from working effectively.

“There is capital in the system,” Campion says. “The issue is that it is not flowing to the right businesses in a way that enables sustainable growth.”

The gap becomes visible once businesses move beyond the startup phase and begin fulfilling contracts. Many small and medium-sized enterprises secure orders from corporates or government but struggle to obtain the short-term working capital needed to deliver those contracts.

Traditional banks typically require audited financial statements, detailed management accounts and collateral before approving funding. For many emerging businesses, particularly those in underserved communities, meeting these requirements is difficult.

Some companies turn to alternative lenders, but higher borrowing costs can place additional pressure on businesses that are already operating with tight margins.

Access to finance, however, is only part of the challenge.

Campion says problems also arise when funding is mismanaged or when procurement contracts are awarded at a scale beyond a company’s operational capacity. Both situations can destabilise small firms.

Financial literacy and capital discipline are therefore critical, particularly for early-stage entrepreneurs handling larger contracts or funding facilities for the first time.

“Working capital is not discretionary income,” she says. “It is there to fulfil an order, pay suppliers and sustain operations.”

Late payment cycles further strain the system. Businesses that supply goods or services to municipalities or government departments can wait months to be paid, which disrupts their ability to meet obligations and repay funders.

These delays can create a chain reaction. When repayments stall, lenders face losses, lending becomes more cautious and the cost of capital rises for other businesses.

Legal enforcement is rarely a quick solution, as recovering funds through the courts can take months or even years.

The combined effect, Campion argues, is that capital appears scarce when in reality lenders are responding to perceived risk and disorder within the system.

Sustainable improvement will require action across the ecosystem, including better-aligned lending products, stronger financial management within businesses and procurement processes that match contract size to operational capacity.

“If repayment discipline improves and payment cycles stabilise, capital will flow more freely and at a lower cost,” Campion says. “But sustainable growth ultimately depends on execution.”