BRIDGING FINANCIAL GAPS FOR MSMES: ADDRESSING CREDIT ACCESS BARRIERS THROUGH THE PEOPLE’S BUSINESS CREDIT (KUR) PROGRAM

Abstract

Small, and Medium Enterprises (MSMEs) are the backbone of Indonesia's economy, contributing 61.7% to the national Gross Domestic Product (GDP) and employing 97% of the workforce. Despite their importance, MSMEs face persistent challenges in accessing formal financial services, hindering their growth and development. In response, the Indonesian government launched the People’s Business Credit (Kredit Usaha Rakyat or KUR) program, with Bank Rakyat Indonesia (BRI) as a major implementing institution. This study investigates the multifaceted challenges encountered by MSMEs and examines how Bank Rakyat Indonesia (BRI) Unit Office Sidotopo, Surabaya, addresses these barriers through its implementation of the KUR. Employing a qualitative case study approach, data were gathered via semi-structured interviews with one BRI officer and ten MSME owners who have been KUR recipients for a minimum of two years. The findings reveal four primary challenges: low financial literacy, digital technology limitations, documentation and collateral barriers, and insufficient post-loan support. Bank BRI addresses these challenges through simplified loan procedures, direct field assistance, adapted credit assessment models, and community-based outreach. However, challenges remain, especially in the areas of structured capacity building and post-loan mentoring. This study contributes to the literature on microfinance by offering grounded insights into institutional adaptations for inclusive MSME financing in developing countries, and provides evidence-based recommendations for improving future program implementation.