Financing options for Small and Medium-sized Enterprises (SMEs): Exploring Non-bank Financial Institutions as an alternative means of financing

Abstract

The present study is an attempt to identify the financial issues of SMEs of Pakistan. The general objective of the study is to analyse the financing issues of the small scale industries with appropriate alternatives and financing solutions. The extensive literature about financing of SMEs along with single hypothesis (for testing) has been included in research work as base of study. Data collection has performed through primary sources. Quantitative research methods have been employed for the research work. For this research work, sample size of 100 SMEs has been selected from Islamabad and Rawalpindi regions of Pakistan. Statistical data analysis techniques are used to analyse the data which was collected through questionnaire’s survey from SMEs and the results have been presented with hypothesis testing. After identifying the financial issues, the alternatives, financial solutions and recommendations have been given for policy measures. The findings of research work indicate that access to finance is the major issue confronted by SMEs sector in growth and development. Soft and friendly government policies, short and long term loans at lowest interest rate for running and technology up gradation are recommended. NBFIs long term financial lending was found to be the most suitable alternative for financial solutions. PURPOSE: To purpose of this study is to look into the imperative issue of SMEs financing in Pakistan and besides to recognize other elective financing choices accessible to SMEs, for example the financial institutes like banks, non-banking financial intermediaries, or other available options which SMEs’ owners may be unaware of to utilise them fully. METHOD: Primary data has been collected from a survey of SMEs in Pakistan using a comprehensive structured questionnaire.