Exploring the Role and Significance of Alternative Financing Methods in Supporting Small Scale Industries (SSI)

Abstract

Purpose:

The primary objective of this study is to clearly demonstrate how alternative financing methods can effectively address and reduce the financial challenges faced by Small Scale Industries (SSIs), which are vital to the economy. This study aims to critically evaluate the effectiveness and influence of alternative financing methods in addressing the considerable funding gap that frequently impedes small businesses, while also examining their substantial role in fostering business growth and development. The primary objective of this study is to deliver practical and actionable insights that are essential for policymakers, financial institutions and stakeholders engaged with SSIs, thereby enhancing access to and effective utilisation of these innovative financial solutions emerging in the marketplace.

Design/ Methodology:

A structured questionnaire was used to carry out the survey. Data were gathered using both offline and online methods. Data were gathered online using Google Forms. Participants were chosen using random sampling and convenience sampling methods. A total of 135 replies were used for data analysis.

Findings:  

The research elucidates that alternative financing mechanisms substantially mitigate funding deficiencies for small-scale enterprises. Microfinance facilitates a greater number of entrepreneurial ventures compared to other financial alternatives, venture capital stimulates innovation and crowd-funding fosters community involvement. Peer-to-peer lending provides expedited access to financial resources, whereas grants encourage the advancement of socially impactful initiatives. Collectively, these financing strategies augment business development, innovative endeavours and economic sustainability.

Limitations:

The research fundamentally links elements based on self-reported information from SSI stakeholders, which could introduce biases into the results. The analysis is confined to a select range of alternative funding options and overlooks new financial innovations. The study is limited to the Bengaluru region. The constraints in the data preclude a thorough evaluation of regional disparities in the availability and effectiveness of different funding strategies.

Originality Value:

This study rigorously evaluates the comparative impacts of various alternative funding mechanisms for Small Scale Industries (SSIs) within emerging economies. Through the integration of quantitative and qualitative analyses, it provides valuable insights regarding their availability, effectiveness and challenges, thereby augmenting the understanding of innovative financial instruments and their role in the advancement and sustainability of SSIs.