DETERMINANTS OF FUNDING SELECTION FOR SME: CASE STUDY IN BANDUNG CITY

• Main Author: Julian Sanjaya, Vincent
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/40968
• Institution: Institut Teknologi Bandung

Small Medium Enterprise (SMEs) is growing rapidly in Indonesia, SMEs contribute 60,3 % of Indonesia GDP and 92,7% of employment in Indonesia (Central Bank of Indonesia, 2016). Even SMEs have big contribution, SMEs still have difficulties in having their funding due to their innability to have collateral and completed the document, moreover there is deficit in providing loan for SMEs IDR 1.000 trillion per year. The purpose of this paper is to give recommendation for financial institutions in distributing their loan, especially to SMEs, because based on the Indonesia Banking Statistics data released by the Financial Service Authority (OJK), the total undisbursed loan of banks to customers reached IDR 1.455 Trillion at the first quarter of 2018. Therefor this is conducted to maximize the loan distribution to the SMEs so the financial institutions can maximize their loan distribution and SMEs can maximize their business development. Semi-structured interviews was conducted to expert and academician in Bandung. Using qualitative analysis there are three alternative to get funding there are Bank, Micro Banks, and P2P Lending, all the institutions above compared by 5 factors by Saini : loan process, interest rate, process cost, amount of loan, and flexbility of loan application. The data is processed by Analytic Hierarchy Process (AHP) a theory of measurement through pairwise comparison. The result of this study can be useful as the information to generate recommendation for financial institutions and also goverment related to the regulations in order to optimize the loan distribution and SMEs development.