This document discusses financing options for small and medium enterprises (SMEs) in the European Union. It begins by noting high expectations that Capital Markets Union will help SMEs raise financing as easily as large companies, but questions whether these expectations are justified. It then reviews typical financing sources for SMEs in the United States, the small role of SME securitization in Europe and the US, and problems with the SME bond market in Germany, including fraud allegations and a high default rate. The document concludes by arguing that strengthening small, local banks could better promote SME financing since these banks typically lend more to SMEs and have closer relationships with them.