Challenges and Solutions Regarding Access to Business Capital for MSMEs

Abstract

As a vital pillar of the national economy, micro, small, and medium-sized enterprises (MSMEs) contribute significantly to sustainable economic growth, income equity, and job creation. Despite their strategic role, the majority of MSMEs still face various obstacles in accessing adequate capital to support their business development. This study aims to analyze the challenges MSMEs encounter in accessing business capital and to identify potential solutions to enhance the sector's financing capacity. A qualitative descriptive literature review was conducted, analyzing relevant scholarly publications regarding MSME capitalization. The findings indicate that the primary constraints facing MSMEs include low financial literacy, poor administrative and financial reporting quality, limited human resource capacity, stringent financing requirements imposed by formal financial institutions, and low adoption rates of digital technology. Conversely, strategies such as improving financial and digital literacy, strengthening business financial governance, utilizing fintech-based financing alternatives, and optimizing government support programs have the potential to improve MSMEs' access to capital. Therefore, sustained collaboration among the government, financial institutions, and business owners is essential to create a more inclusive financing ecosystem that fosters MSME competitiveness and sustainability in the digital economy era.