Small Business Financing: Determinants and Obstacles in the Context of Indonesia
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This research identifies (1) factors that may affect the decision to have a loan, and identifies the benefits and obstacles faced by small business firms in relation with their financing sources; and (2) investigates what factors drive the SMEs in choosing financing sources and what factors disrupt the SMEs’ growth in terms of profits. Using survey methods through questionnaire and interview, this study consists of 2,800 observations throughout South Sumatera-Indonesia-Indonesia.The results reveal that (1)finance is the most important factor in affecting the decision to have a loan; (2) the service provided by the financier/credit sales, the closest location of the financier to their business, the ease of method payment method of payment, the SMEs’ visit to the financier’s office, the leniency of mortgage requirements, the leniency of terms and conditions imposed by the financier, the interest rate charged and the approach from the financier are factors which considered by the SMEs in choosing source of financing; (3) the limited capital they had, the loss of product quality control, the difficulty in obtaining raw material, the distance of the market location, the lack of qualified employees they had, and the limitations of technology they use to produce their product.are barriers of the SMEs’ growth.
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