Sources of Finance for Enterprises in India: Difficulties and Solutions

Page: 249-260
Harshal G. Vashi (GIDC Degree Engineering College, Navsari, Gujarat)

All stakeholders, including entrepreneurs, financial companies, and governmental institutions have expressed concern about just the source of financing for different sized enterprises (MSMEs). The main mission of the study was to pinpoint the numerous difficulties MSMEs encountered while trying to find financing at certain points in their life cycles. This study represents a groundbreaking effort to concentrate on such elements. This research investigates regarding the lack of finance related literacy among owners of different-sized enterprises poses a significant obstacle to finding and utilizing funding sources. A sample of 85 MSMEs was used to gather data through personal interviews with a structured questionnaire. The survey, which covered a wide range of industries including precision tools, weavers, jewelers, food stores, metal works, textiles, etc., was mostly done in the South Gujarat region. The results support prior studies’ findings that formal sources like banks are greatly under-utilized in comparison to non-formal solutions of finance individual as well as group assets. According to this study, the main inadequate collateral assets and the entrepreneurs’ lack of financial literacy were the biggest obstacles to the under-utilization of formal sources. There have been suggestions made for business owners, financial institutions, and politicians based on the finding that the need for finance varies depending on the MSME’s life-cycle stage.