$5.2 Trillion financing needs for small businesses in developing countries
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• Bank financing.
• family finance.
• Funding from specialized government institutions.
• Showcase projects on crowdfunding platforms.
• Financing through venture capital or from an angel investor.
Many citizens are looking for steps to finance small and medium-sized companies, so reports from the World Economic Forum revealed that there are 5 ways of financing, including: bank financing, family financing, financing from specialized government institutions, as well as by presenting projects on crowdfunding platforms, and financing through capital. risk or from the angel investor.
Financing small and medium-sized companies has become a challenge for financial institutions and entrepreneurs alike, so companies are working on using technology to reduce risks and enhance efficiency to reduce costs. There are five ways to finance small projects, which are as follows:
· Bank Financing
Despite the challenges that small projects may face in obtaining bank financing, a number of banks still provide part of their services to this field, so entrepreneurs have to work on completing an in-depth feasibility study on their projects and submitting it to the bank, which can study the possibility of granting financing or Part of it.
· Family finance
The owner of the project idea can seek to obtain funding from his family or friends, whether by providing appropriate financial support, or building family partnerships that can provide the necessary capital to start his project, provided that this is done within the feasibility study, which determines the nature of the project and its activity and the means by which Through it, he will be able to make profits, which will enable the entrepreneur to return money or distribute shares and profits to partners.
Perhaps one of the most important forms of support granted by governments to small projects is the provision of grants or soft loans to small projects, which is an important form of project assistance, where entrepreneurs must submit detailed studies on the project and indicate its path and feasibility, so that it can know and estimate its future. .
Also, institutions specialized in supporting small projects offer other means of assistance, including technical, knowledge and financial support, by establishing business incubators that qualify entrepreneurs to lead their projects to success.
· Crowdfunding platforms
Crowdfunding platforms work to provide community support to owners of innovative ideas, by attracting small-sized capital from community members, to participate in financing commercial projects based on innovative ideas.
The platforms allow individuals and companies to start presenting their ideas to attract the necessary capital for them from community members, so that they can implement their projects based on the concept of crowdfunding.
· Venture capital
Small projects can be financed by the method of venture capital, or as it is called venture capital, in which one of the investors who have already successful business is convinced of the idea of the entrepreneur and finances the project, by buying a large part of his shares, and the way to recover it for financing through Sell these shares later when their value increases. As for the angel investor, he is the one who decides to finance the project from his own money in return for obtaining a share in it, or redeemable financial bonds.
· Financing needs
The International Finance Corporation estimates that 65 million companies, or about 40% of MSMEs in developing countries, have financing needs of $5.2 trillion each year. Entrepreneurs are a driving force in job creation and local economic development, as they provide many basic goods and services to communities.
