ALTERNATIVE FINANCING FOR ENTERPRISE DEVELOPMENT: THE CASE OF UKRAINE

Abstract

Introduction. Enterprises at different stages of their operation and development life cycle need appropriate financial support . The article describes the alternative forms of financing, focusing on the mezzanine financing instruments (source of financing). Purpose . It aims to identify, characterize, and evaluate mezzanine financing instruments in comparison to the debt and equity financing sources. Results. Mezzanine financing represents an innovated form of financing, that is new and less popular in Ukraine. The problems of Ukrainian financial market are underlined. The article specifies the criteria of evaluation of different sources of financing including classic and innovative forms. It shows strength and weaknesses of each financing source in Ukrainian condition. The T. Saati Method is used to form the matrix of the advantages of different sources of financing. This evaluation was performed on the basis of 7 criteria. Originality . A systematic analysis using the Saati hierarchy method showed, that the most important criterion for choosing a source of financing for Ukrainian enterprises is independence in management and decision-making in the enterprise, other factors influencing the choice of financing are the size and price of the financial source. Considering a small business, that seeks to scale its business and innovate, the attractiveness of the types of financing was assessed on the basis of selected criteria. The analysis shows that traditional loan is much more popular, then other sources, but it also indicated the advantages of mezzanine financing in comparison to the other types of financing. Conclusions . Enterprise needs adequate financial support, the forms of which are currently quite diversified. Alternative sources of financing could be direct investment funds, government bonds for emigrants, that gives countries access to their migrants' funds and uses them for economic development. Among the alternative forms of financing the development of enterprises is mezzanine financing which is widespread in international activities but is practically not used in Ukraine. Ukrainian financial market can implement mezzanine activities on the basis of European experience through the creation of specialized financial institutions. This important step requires legislative changes, that are necessary to implement mezzanine financing and other alternative forms of financing of the enterprises.