Financing alternatives for a small firm in Malta

Abstract

Financing problems have always been at the core of the difficulties faced by local small firms. Traditionally, bank lending has been the only source of funds, but today, the range of financing alternatives has been widened. Furthermore, efforts have been made by various institutions to bridge the gap which often exists between the provider of funds and the user. To be able to understand the implications of the various types of sources of finance, the theoretical aspect of alternative sources of finance is explained. The local availability and accessibility of the small firm to such sources is then discussed. The important role, which, despite anything, is still retained by bank financing, has also been given its due importance, given that credit institutions themselves have greatly extended their services to be more within the reach of the small firm. But are the firms aware of such facilities? And, if they are aware, do they make use of them? An attempt to answer such questions was the main aim of the survey carried out. As could be expected, many financing alternatives are yet unknown to various firms. Such unawareness, however, could be justified in the light of various factors. The last section thus attempts to make some recommendations as to how the awareness and use of the various alternatives could be enhanced.