Investigating Challenges Faced by Investment Firms in Financing Small Businesses

Abstract

Purpose: This study delves into the issues faced by investment firms in financing small businesses formally as Small, Medium and Micro Enterprise (SMME). Despite being the backbone of the economy, small businesses have been struggling to attract investment, and the challenges faced by investment firms have not been thoroughly examined. Design/Methodology/Approach: The research method utilized in this study was qualitative, with data gathered from a non-probability sample of 12 participants using purposive sampling technique. Semi-structured interviews were conducted, and inductive thematic analysis was used to analyze the data. Findings: The study reveals that investment firms have specific requirements when it comes to financing SMMEs, such as compliance with rules and regulations. The study recommends credit reporting systems and investment in high return projects to address these challenges. Implications/Originality/Value: The research concludes that investment companies face difficulties in financing small and medium enterprises due to lack or low credit scores and the maturity gap in these enterprises.