Problems of Financing Small-Scale Enterprises and Possible Solutions to It

Abstract

SMEs are the backbone of any economy as they create most jobs but still, they are ignored in terms of finances in most developing countries as Pakistan. SMEs create almost 60% of jobs worldwide but still lack in finances. Main issues which arise in financing SMEs are kind of issues which can be resolved if focused on. Most of issues are at the end of government and banks. Mostly government do not focus on well-being of SMEs, so they do not focus on making any new policy which can help SMEs. Due to less control’s banks do not always follow rules and they reject the applications of SMEs without any explanation. The main issue which arises on government end is that excessive paperwork is required for any opportunity and SME have to bear that cost by itself even after completing the paperwork SMEs are rejected for so many other reasons. To analyze the actual problems which arise in financing of SME I chose questionnaire and interviews as my primary and secondary research methods and results were same as thought. In suggestions I suggest that governments should increase the control which will make sure that banks have genuine reason to reject the loan of SME. Government should also launch schemes time to time which will encourage SME to expand and let youth start their own small company as this will flourish the economy.