Bangladesh Bank Training Academy Journal

Abstract

Simultaneously thesources and the uses of funds play an imperative role in maximizing the worth of an enterprise. This paper investigates the necessity of effective sourcing as well as usage of funds of SMEs. Primary as well as secondary data have been utilized in the present research work. The collected data have been analyzedusing some financial and statistical tools.Sample SME enterprises face problems in obtaining funds in terms of asset based collateral and high cost structure offunds from banks andfinancial institutions; in using funds in terms of insignificant investment in fixed assets, lack of investment opportunities, shortage of investable funds and in general low opportunityfor expansion of their business. However, their dependency on inefficient finance service usually from informal sources is more. Accurate credit assurance scheme should be developed for the lending institutions in order to coverboth the credit risk and additional loan management cost. Accessible investab e funds along with investment opportunities infixed assets should be developed for SMEs in Bangladesh.