Small Business Financing for Supporting SMEs in Indonesia

Abstract

Small and medium enterprises (SMEs) are the main pillars of a country economy, especially within developing countries. These types of businesses have existed since the Dutch colonial era. However, their existence is now threatened due to the rapid expansion of modern businesses that have spread into rural areas of Indonesia. Therefore, SMEs are in dire need of government assistance from both central and local governments, from a financial and non-financial perspective. In order to strengthen the SMEs' capital, so that they are able to sustain their businesses, this chapter intends to propose a financing model for SMEs that could be given by the government through financial institutions, so that SMEs will be able to gain easy access to capital resources. In the other words, this condition is expected to give maximum support to the development of SMEs. As a result, the SMEs will contribute to eradicating unemployment and poverty by strengthening the economy of Indonesia.