Moldovan SMEs prefer traditional ways of financing and do not have sufficient financial literacy to use alternative instruments.
These are the general conclusions of the study of needs and practices related to financial instruments, presented during the III tax conference e-TAXCON’2022 by Oana Stanciu, Director of Management Consulting, PwC Romania. The study, conducted by PwC in collaboration with UNDP, was commissioned to find out to what extent Moldovan SMEs know and use traditional financing instruments, such as bank loans and loans from friends and acquaintances, as well as alternative ones (leasing, factoring, private equity, crowdfunding, business angels, etc.). The study showed that SMEs are the most familiar and over the past six months have used banking products, leasing, factoring, while such instruments as bond issuance, fintech loans, mezzanine financing, etc. are almost not used due to the lack or insufficiency of knowledge about them. As for the knowledge of financial entities, their organization and ways of contacting them, 45.8% of respondents have a good understanding of how leasing companies work, 40.2% - asset-based lending institutions (banks, savings and loan associations), 35% - development partners, while from 8.3% to 18.2% of respondents have knowledge about crowdfunding platforms, venture capital, business angels, hybrid instruments. At the same time, it is noted that all categories of SMEs would prefer to apply for bank loans or receive state subsidies/assistance from development partners to a greater extent. Herewith, micro and small businesses allow more differentiated financing instruments (35-46%), while medium-sized businesses are more conservative (less than 20% of the respondents would prefer alternative instruments). Respondents named high interest rates as the main barriers to obtaining financing, while respondents in rural areas experience difficulties with preparing a business plan much more than respondents from cities, consider the process of obtaining financing complex and bureaucratic, inaccessible at the local level. In general, the study showed a low level of financial literacy, which plays a big role in the diversification of the tools used in business activities. The authors of the study recommended developing a stock market in Moldova, launching a crowdfunding portal, creating a factoring fund for some industries, and promoting financial literacy and access to information. 318 respondents took part in the study, organized by the method of interviews and consultations, 86% of them are representatives of micro-enterprises, 12% - small and 2% - medium-sized enterprises. About 79% of them work in urban areas, 21% - in rural areas.// 16.09.2022 — InfoMarket
