This report reviews a large body of research, and demonstrates how SMEs in developing countries are often hampered by an inability to obtain financial capital for growth and expansion. Local financial systems do not sufficiently cater to the needs of SMEs, with negative consequences for economic development. This report develops interventions to close the gap in financing, and outlines contributing roles for public and multilateral actors. It describes both the challenges and the potential for international financial institutions to work through local intermediaries and stimulate capital provision to SMEs in a financially and socially sustainable manner.