Small and Medium Forest Enterprises (SMFEs) constitute more than 98% of the production units and 75% of the timber production in Brazil. With annual growth of 2.8 and 4.7% respectively, micro and small enterprises have grown numerically much faster than medium and large enterprises since 1995, notwithstanding their high mortality rates. Despite their importance to the national economy of Brazil, SMFEs have traditionally been marginalized in policy and decision-making. This study explores the possibilities for constructive change. The study recommends policy changes and new information and financial help services for SMFEs – complemented by further reductions in the bureaucracy associated with business registration and approval. It provides a powerful justification for a new initiative that would focus more directly on overcoming the barriers faced by the SMFE sector in Brazil.