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Innovations and Financing of SMEs, Part II trust should be aimed. The classical `house-bank' relationship is especially important during a credit crunch because lending conditions make it difficult for SMEs to obtain funds. In order to stabilize the business for the future, lack of innovations and resources can be compensated by Strategic Alliances and `Business Angels'; profiting from the expertise and resources of others. In order not to loose too many shares of the business, exit strategies for investors and business partner might be helpful. FUTURE RESEARCH DIRECTIONS Future research could address the problem of achieving transparency of risks and opportunities related to innovations in order to ease the credit application process. Furthermore, it would be helpful to analyse why firms employ non-tradi- more financial funds to support struggling SMEs. Therefore, it is critical how a lender's credit rat- ing system judges the credit worthiness of firms. As the in-depth interview with the executive of a leading German Private Bank confirmed, some banks apply a so called "industry traffic light schematic" which looks at the economic situation of specific sectors rather than at individual firms. This might lead to a scenario where an innova- tive firm with a `core competency' is refused a loan because of its branch ranking. Fortunately, the credit rating systems evolve towards a more individual and differentiated rating. On the other hand, bankers complain about low equity ratios and in-transparent capital structures of SMEs due to grouping structures, creating of reserves and assessment of materials and "semi-finished prod- ucts" in order to minimize taxation (by lowering retained earnings). Besides the traditional banking loans, there