Funding of Small Scale Enterprises: The Microfinance Option

Abstract

Many researches over the years have pinned down the lack of finance as the greatest and deadly plight of majority of small enterprises around the world. This paper briefly examine this as well as those businesses that can be classified as micro and small in today’s economy. Concept of microfinance was explored to identify if this can be applied to meet the financial needs of Micro and Small Scale Enterprises (MSSE). It conclude that, the issue of grants, subventions and loan disburse by the government do not reach the intended users. But if microfinance approach is adopted, while the organized private sector runs such microfinance institution, many Micro and Small Scale Enterprises (MSSE) who are hitherto unserved by the conventional bank will have access to loan facility structures after their peculiar needs, and if these Micro and Small Scale Enterprises (MSSE) can operate in groups, it will alleviate the issue of providing fixed and financial assets collateral which will be substituted with group based collateral that is acceptable to micro finance institutions.