Financing Fences of MSMEs: A Study on Adilabad District of Telangana State

Abstract

This study aims to investigate the major financial problems encountered by the Micro, Small and Medium Enterprises (MSMEs) in the Adilabad region of Telangana State. Growth of MSME is very important for the economy, and it is considered the backbone of the economy and the engine of economic development. Yet, access to adequate financing is seen by the MSMEs as one of the major constraints on their growth. In its report on MSMEs (2012-2017), the Indian Planning Commission identified one of the major issues underlined was finance. The survey conducted by MSMEs reveals that Government, financial organizations and banks were not providing timely loan disbursement. Financing challenges often involve high interest rates, limited collateral, lengthy credit approval timelines, and financial literacy constraints for MSME owners. To draw valid conclusion the primary data was analyzed with multiple regression to know the impact of financing problems such as high interest rates, limited collateral, lengthy credit approval timelines, and financial literacy constraints on the fund’s procurement in this study. The result shows financing problems were positively effecting for the growth of MSME sector.