OECD governments have long assigned a high priority to improving conditions for access to finance for new, innovative and fast-growing SMEs and established firms pursuing expansion. This report analyses the potential and challenges of mezzanine finance for addressing diverse financing needs of SMEs and entrepreneurs, highlighting the advantages and costs in relation to other financing techniques. It is the first in a broader series of studies to map and analyse the full range of financing instruments for SMEs alternative to traditional bank credit. It describes the types of SMEs – or stages in their life cycle – for which mezzanine finance is best suited and the ways in which it is used to finance SMEs, comments on the evolution of mezzanine finance in the wake of the financial crisis, and analyses policy approaches to support its broader use.