Indonesian SMEs urged to choose financing wisely for sustainable expansion

For small and medium-sized enterprises (SMEs) in Indonesia, securing adequate capital remains a significant hurdle when aiming for business expansion. As the demand for financing grows, SMEs are urged to be more discerning in their choice of loans to ensure that expansion efforts boost productivity rather than burdening their financial health.

“

Capital should be an investment to accelerate business growth, not a burden. Therefore, we always encourage business actors to choose financing wisely, according to their needs, ability to pay, and business development goals.

Additional capital is typically sought for various purposes, including increasing production capacity, stocking more goods, acquiring equipment, opening new branches, or hiring more staff. However, the decision to take out a loan must be backed by robust planning. SMEs need to clearly define the loan's purpose, whether for investing in production equipment, scaling up operations, expanding marketing reach, or other productive needs. Well-measured planning makes it easier to evaluate the effectiveness of the funds used.

“

IPS, as an official partner of BFI Finance, not only assists with the financing application process but also provides assistance from the consultation stage so that prospective debtors obtain a financing scheme that suits their business needs.

Furthermore, the loan amount should align with the business's cash flow capabilities. While large loans can accelerate expansion, inadequate planning can lead to operational disruptions due to excessive repayment burdens. Discipline in managing borrowed funds is also paramount. Financing should be used as planned and kept separate from personal expenses to maintain the financial health of the business.

“

Education about financing mechanisms is also an important part of the process. Business actors need to understand various aspects of loans, from financing ceilings, tenors, interest or returns, to installment payment schemes before making a decision.

It is equally important for SMEs to verify that their chosen financing institution is legitimate, licensed, and supervised by the Financial Services Authority (OJK). This ensures legal certainty and a transparent financing process. Andi Awaludin, Director of Indo Palm Solusi (IPS), emphasizes that business financing should serve as a tool to strengthen growth, not create new burdens. IPS, as an official partner of BFI Finance, not only assists with loan applications but also provides guidance from the consultation stage to ensure clients secure financing schemes that truly match their business needs.

“

Healthy loans are loans that are well understood. Therefore, we always prioritize information transparency so that business actors can calculate their financial capabilities before taking out a loan.