Determinants of SMEs Financing Pattern in India-A Rotated Factor Analysis Approach

This study focuses on the organization-wise financing pattern of small and medium scale industries (SMEs). It attempts to assess the relationship between forms of business and sources of capital financing among SMEs in India, one of the developing markets in Asia. Employing factor analysis technique, the study finds that the capital needs of the entrepreneurs are met with the bank loans, money lenders, account payable and friends and relatives. These sources of capital are not easily accessible by different business organizations to fulfill their capital requirement. In addition, analysis of secondary data reveals that industrial credit carries certain banking restrictions, which needs to be identified to help in promoting the SME sector by providing some suggestions required for the new economic policy regime.