External financing of SMEs in Serbia

Abstract

Considering the fact that small and medium enterprises often face funding difficulties, this paper discusses and analyzes the issue of financing SMEs in Serbia, i.e. the usage and possibilities of alternative, relatively more affordable, cheaper and more flexible options for financing entrepreneurial projects, which are available in practice. The research was conducted by surveying entrepreneurs and SME owners, in order to show the extent to which SMEs in practice rely on their own financing of their business, and how much is represented by financing from external non-banking sources. Also, the paper investigates and analyzes the level of satisfaction of entrepreneurs with the current usage of various financial instruments that they can access in different circumstances, as well as potential opportunities for their usage, with a focus on the current state of SME financing in practice. The obtained results indicate that entrepreneurs mostly rely on own financing of their business, that various options of non-bank financing are insufficient and that there is a lot of untapped potential. However, there is a need for more simplified procedures and better informedness of entrepreneurs.