Micro, Small and Medium Enterprises (MSMEs) Financing Strategies

Micro, Small and Medium Enterprises (MSMEs) provide a solid foundation in global economy. The importance of them lies in many fields, such as economic growth, job creation, innovation, and fostering entrepreneurship. They make great contribution to local economies and overall industrial development. However, many of them have fallen into financing dilemma since the pandemic impact occurred. Due to the lack of sufficient collateral, credit score, financing channels and risk management, it is hard for MSMEs to get access to fund needed. Therefore, this study aims to research the factors that influence MSME financing, and give strategic suggestions based on narrowing their finance gap. Quantitative multiple linear regression analysis is used in this study. The findings indicate that the gap in enterprise finance can be significantly influenced by unmet potential financing demand, credit constraints, and profitability. Probable reasons resulting in these issues are limited financing channels, lack of good credit rating, insufficient credit supply provided by external or internal sectors. Thus, by innovating lending products, diversifying financing channels, with the financial support of governments and other institutions, MSMEs finance gap and trap can be narrowed.