Sustainable Financing Strategies for the SMEs: Two Alternative Models

A sustainable financing strategy for SMEs should aim to enhance a low-cost collateral-free supply of loans with good track records repayments banks. In this paper, we suggest two alternative models that address certain borrowing constraints SMEs. First, the model incorporates institutional mechanisms involving government, banks, and The employs two-pronged approach: (i) government enhances loanable funds (ii) identifies SME borrowers through skills development programs introduces them This will reduce default risk allow banks offer lower-interest credit SMEs, thereby improving their access finance performance. Second, could be extended accommodate digital using data-driven score banks’ risks transaction costs or without funds. proposed resolve moral hazard selection bias problems. Our are based on public-private partnership approach therefore solve empirical results support outcomes consistent predictions our theoretical models.