NEEDS CAPITAL FOR SMALL AND MEDIUM ENTERPRISES

Abstract

Many SMEs to grow face the challenge of increasing the need for access to capital and competencies to enable the company to grow and develop new products or expand into new markets. SMEs may have limited access to loans from banks and credit institutions, or access may mean capital investment by company owners. SMEs typically use different types of finance, often provided by different service providers, they can work with two or three banks, and they can access other sources of financing, both internal and external; their combination. To get started, small businesses initially rely on their own sources of funding, which include their own funds, assets from the sale of property, or retained earnings. In the course of operations, the need for capital exceeds the internal capabilities of the company and then it must consider the possibility of using external sources of financing to provide funds for business development and the necessary investments. Financing from external sources is especially problematic for most new companies that do not have a long history in their operations and lack funds for new innovation projects.