Abstract: The objective of this study is to analyze the challenges faced by SMEs in need of financing in developing countries, with a focus on Nepal. In Nepal, the SME sector is a major economic player and therefore, reinforcing the responsibility of this sector in the national production is a major strategy of the country. High loan rates and high collateral requirements remain a big obstacle in the access to finance to SMEs and hence in the development of the economy. However Nepal’s expedited license and permits grant system and the contribution of female workforce in the SME sector remain its strong points that can be exploited for a faster growing SME sector. Recent policy reforms helped in the creation of an environment in which the SME sector can flourish. However, efforts for promotion of SMEs are confined to the urban centers in regional headquarters and lack the ability to carry out their mission. The increasing numbers of branches, opened in rural areas, by the commercial banks have also been lukewarm because these financing institutions are more focused on transferring rural savings to urban sectors than using them for improving the local entrepreneurial efforts. A lot needs to be done for the promotion of Nepal’s troubled SME sector, which, if properly taken advantage of, can offer a lifeline to its difficult economy.
Keywords: SME Innovation; SME Financing; Intellectual Property Protection; Developing Countries.
Title: Challenges to SME Financing: A Case of Nepal
Author: Sarah Ahmad
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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