This chapter describes the main factors that make small- and medium-sized business (S&MSBs) a key component of the Central American economies. It explores the national strategies for developing S&MSBs that seem to emerge from both government policies and the existing local institutional framework. The chapter presents the main barriers to the development of S&MSBs and what both entrepreneurs and support institutions consider the main problems with strengthening the sector. It proposes a radical change in the institutions’ approach to relations with the beneficiary entrepreneurs and the outlook for producing a tangible drive in the development of S&MSBs throughout the region. In Costa Rica, however, it is likely that the S&MSB sector will develop more rapidly than in the other countries of the region. The strategy for developing S&MSBs in Nicaragua under the Sandinistas constitutes a special case. In general, public policy affecting the development of S&MSBs focuses on tax incentives, soft loans and interinstitutional support committees.