Small and medium sized enterprises (SMEs) represent the main driving force for social and economic development, but also the most numerous and important sector, which assigns the fulfillment of multiple economic, technical and social functions.
At the same time, the SMEs sector remains very vulnerable and sensitive to macroeconomic changes both locally and globally. The global economic and financial crisis, as well as the pandemic situation of recent years, also influenced quite negative the development of the small business. Although the volumes of loans and credits granted have increased substantially in recent years, SMEs have not fully felt the effect of this increase.
Thus, access to finance remains one of the most important issues in the development process of the SMEs sector. The limited access to traditional finance for SMEs is due to relatively high interest rates from the banks and sometimes low quality of business plans developed by entrepreneurs. In this context, it becomes essential to examine how we can improve the access to finance for SMEs both with traditional and alternative sources.
In this research paper, we investigated traditional and alternative sources of financing for small and medium enterprises in the Republic of Moldova and proposed some recommendations regarding the improvement of the financing process of the small and medium sector.