Abstract
The use of credit as a funding source must be based on careful planning and decision making, especially for medium scale entrepreneurs. Incorrect use of credit may cause problems for medium scale entrepreneurs. Therefore, the acts of medium scale entrepreneurs in using credit as a funding source are closely related to their perception of the benefits and risks of the credit obtained from financial institutions. Consequently, this research aims to reveal the perception of medium scale entrepreneurs in utilizing credit as a funding source. This research uses 74 respondents as samples, which consist of medium scale entrepreneurs in Surabaya, Indonesia. This research is categorized as a qualitative descriptive research. The data were obtained through questionnaires distributed to medium scale entrepreneurs who used credit as a funding source in running their business. The result of this research suggests that the highest average value indicates that medium scale entrepreneurs perceive credit as a stimulus to act carefully in managing and using their money. This research also concludes that education and business experience as demographic factors hold significant values towards credit as stimulus. Likewise, age and business experience as demographic factors are also perceived to have significant values on credit as burden. DOI: 10.5901/mjss.2016.v7n1p11
Highlights
Micro, Small and Medium Entreprises (MSMEs) are the backbone of Indonesia's economic development
The indicator for credit perception as burden with the highest average value is the perception of credit as a psychological burden when the market is sluggish with an average of 3.99
The conclusions of this research concerning the perception of medium scale entrepreneurs in Surabaya, Indonesia regarding credit decision making are as follows: (1) the majority of the medium scale entrepreneurs have had previous experience before running the current business
Summary
Small and Medium Entreprises (MSMEs) are the backbone of Indonesia's economic development. It is true that MSME has several flaws, such as the lack of legal entities, income instability, technology simplicity, and the use of family members as labours. Despite these flaws, more attention and support should be given to develop MSME into sustainable enterprises (Hastuti, 2003). Supramono and Putlia (2010) revealed that only a few enterprises used credit as a funding source, either from banks or other financial institutions. This fact underlines the significance of examining funding sources, credit
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