Hedge funds are increasingly providing financing to small to medium sized enterprises (SMEs) as banks retreat from lending, according to a paper published by the Alternative Investment Management Association (AIMA).

The paper – “Financing the Economy: The role of alternative asset managers in the non-bank lending environment” - said that these private debt funds collectively manage approximately $440 billion in Assets under Management (AuM), with inflows of $64 billion in 2014 alone. The bulk of this capital is going to SMEs which are typically too small to raise money through the public corporate bond market, or have struggled to borrow from the traditional banking sector post-crisis.