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 Bangladesh. In Bangladesh, 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. The main source of financing for SMEs in Bangladesh are commercial banks, however the constant monitoring required with loans forward to SMEs, problems of recovering the loan amount and the high risk associated with low returns as compared to industrial loans, make SME financing appear far less attractive to the commercial banks. Despite the heavy presence of SMEs outside of metropolitan areas, SMEs with a closer proximity to big cities get more advantage of these loan schemes. The major portion of financing provided to SMEs goes to the SMEs in urban areas. The main challenges facing banks when offering loan facilities to SMEs is the lack of good quality collateral, lack of appropriate documentation and poorly defined business plans. The usually high interest rates charged for SME financing, quality collateral requirements and guarantee obligations combine to make access to financing difficult for SMEs all over the country.
Keywords: SME Financing; External Financing; Developing Countries.
Title: SME Financing: A Case of Bangladesh
Author: Sarah A. Ahmad
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Vol. 10, Issue 1, April 2022 - September 2022
Page No: 49-55
Research Publish Journals
Website: www.researchpublish.com
Published date: 19-April-2022
