MSME FUNDING THROUGH FINTECH LENDING

Micro, small and medium enterprises (MSMEs) are often referred to as the backbone of the country's economy. The proportion of MSMEs from all business operators in Indonesia even reaches 99.9 percent. But the classic problem that is often faced by MSMEs is limited access to capital funding. At present there are still SMEs who have difficulty accessing capital amid the massive business lending from the government through banks. The reason is partly because MSMEs still have limited assets that can be used as collateral for financing by banks.

Along with advances in technology, the existence of a digital platform in the form of fintech lending can be one of the MSME solutions in getting capital. Fintech lending or also called peer-to-peer lending or Information Technology-Based Lending and Borrowing Services (LPMUBTI) is one of the innovations in the financial sector with the use of technology that enables lenders and loan recipients to conduct borrowing and lending transactions without having to meet in person. The lending and borrowing transaction mechanism is carried out through a system that has been provided by fintech lending providers, both through the application and website pages.

The way fintech lending works is based on information technology, so borrowers and lenders do all of their transaction processes based on information technology. These financial services bring together lenders (lenders) with borrowers (borrowers) through an electronic system online. MSMEs who wish to register as borrowers are also asked to submit identity documents, proof of company legality, and company financial statements. Loan interest rates will be applied and loan proposals made by the borrower will be included in the marketplace that has been provided so that all lenders can find out about the loan applications made by the borrower.

Funding through fintech lending can facilitate MSMEs, especially those that are unbankable. But on the other hand, the community must calculate the income between the debt burden that must be borne, and the use of funds is really for something productive so as not to get stuck in bad credit. The community must be directed to borrow from legal fintech, to reduce the risk of misuse of data or excessive interest.

The role of the government is expected so that the community can utilize fintech lending appropriately, including by conducting education about fintech and entrepreneurship training, so that MSMEs have room to develop. In addition, financial literacy is also needed because there are several risks including the existence of illegal fintech and customer data leakage.

References

ojk.go.id. Financial Technology. Accessed on 20 Juni 2020. https://www.ojk.go.id/id/kanal/iknb/financial-technology/Default.aspx

cnbcindonesia.com. 2 Oktober 2019. Fintech Lending Bisa Jadi Andalan Pembiayaan UMKM. Diakses pada 20 Juni 2020. https://www.cnbcindonesia.com/tech/20191002132427-37-103848/fintech-lending-bisa-jadi-andalan-pembiayaan-umkm

koinwork.com. Fintech Mampu Membantu Perkembangan UKM. Accessed on 20 Juni 2020. https://koinworks.com/blog/fintech-mampu-membantu-perkembangan-ukm/