ALTERNATIVE METHODS OF SMALL BUSINESS FINANCING IN UKRAINE
Keywords:alternative methods of financing, small business, small business finance, capital structure of small enterprises
Today's realities show a crisis in the solvency of domestic businesses, which is caused, in particular, by lower interest rates after 2008. This encourages small businesses to attract alternative financing methods. Access to external financing in times of crisis is becoming more difficult, especially for small businesses. The purpose of the study is to examine the practice of alternative methods of financing small business in Ukraine in a pandemic and solvency crisis in 2020. The results show that in developing countries, in particular in Ukraine, lending as a form of financing for small businesses is underused due to high interest rates. Small businesses mainly rely on financing from creditors (suppliers) and management of accounts payable, receivables. Government support is also low. The main methods of financing include financing at the expense of creditors, in particular, it may be deferred payments for goods, works and services. At the same time, small business did not significantly increase the amount of financing through loans on a long-term basis in 2010-2019. Compared to long-term liabilities, corporate equity is a more widely used source of financing in Ukraine. In the period of economic recovery (2017-2018) there was an increase in the share of long-term commitments and provision and a reduction in the share of equity capital in the balance of small enterprises. This means that the structure of financing depends on the country's economy: in a crisis, borrowing is reduced. In Ukraine, starting from 2017, there has been an increase in the level of efficiency of state support for the agro-industrial complex of Ukraine through the expansion of public funding instruments, taking into account the various needs and problems of individual industries.
Abdulsaleh, A. M., & Worthington, A. C. (2013). Small and medium-sized enterprises financing: A review of literature. International Journal of Business and Management, 8(14), 36. http://dx.doi.org/10.5539/ijbm.v8n14p36
Atherton, A. (2012). Cases of start‐up financing. International Journal of Entrepreneurial Behavior & Research. 18 (1), 28-47. https://doi.org/10.1108/13552551211201367
Bates, T., & Robb, A. (2016). Impacts of owner race and geographic context on access to small-business financing. Economic Development Quarterly, 30(2), 159-170. https://doi.org/10.1177%2F0891242415620484
Cheng, S. (2015). Potential lending discrimination? Insights from small business financing and new venture survival. Journal of Small Business Management, 53(4), 905-923. 10.1111/jsbm.12112
Comeig, I., Del Brio, E. B., & Fernandez-Blanco, M. O. (2014). Financing successful small business projects. Management Decision. 52 (2), 365-377. https://doi.org/10.1108/MD-01-2012-0051
Cowling, M., Liu, W., & Ledger, A. (2012). Small business financing in the UK before and during the current financial crisis. International Small Business Journal, 30(7), 778-800. https://doi.org/10.1177%2F0266242611435516
Czarnitzki, D., & Hottenrott, H. (2011). R&D investment and financing constraints of small and medium-sized firms. Small Business Economics, 36(1), 65-83. https://doi.org/10.1007/s11187-009-9189-3
Geho, P. R., & Frakes, J. (2013). Financing for small business in a sluggish economy versus conflicting impulses of the entrepreneur. The Entrepreneurial Executive, 18, 89.
Krishnan, K., Nandy, D. K., & Puri, M. (2015). Does financing spur small business productivity? Evidence from a natural experiment. The Review of Financial Studies, 28(6), 1768-1809. https://doi.org/10.1093/rfs/hhu087
Rumiński, R. (2012). Small business financing in CEE–the case of Poland. In 57th ICBS World Conference, Wellington (pp. 1-2).
Smallbone, D., Deakins, D., Battisti, M., & Kitching, J. (2012). Small business responses to a major economic downturn: Empirical perspectives from New Zealand and the United Kingdom. International Small Business Journal, 30(7), 754-777. https://doi.org/10.1177%2F0266242612448077
The Verkhovna Rada of Ukraine (2020). On approval of the Strategy for the development of small and medium enterprises in Ukraine until 2020. Order of the Cabinet of Ministers of May 24, 2017 No. 504-r. Available at: https://zakon.rada.gov.ua/laws/show/504-2017-р#Text (accessed November 05 2020)
State Statistics Service of Ukraine (2020). Economic statistics. Economic activity. Activities of enterprises. Entrepreneurship development. Available at: http://www.ukrstat.gov.ua/operativ/menu/menu_u/sze_20.htm (accessed November 05 2020)
Dumanska, I. Yu. (2018). Optimization of state expenditures for financial support of the innovation process of agro-industrial complex. Bulletin of Khmelnytsky National University. Economic sciences, 3, 104-109.
Ivashkevich Kh. I. (2018). Assessment of state support of the agricultural sector as an object of financial control. Scientific Bulletin of Kherson University, 28(2), 63-66.
Ministry of Agrarian Policy and Food of Ukraine (2020). The state of financing of agro-industrial complex support programs in 2019. Available at: https://minagro.gov.ua/ua/pidtrimka/stan-finansuvannya-program-pidtrimki-apk-u-2019-roci (accessed November 05 2020)
Ministry of Agrarian Policy and Food of Ukraine (2020). Government programs of state support in 2018. Available at: https://minagro.gov.ua/ua/pidtrimka/zvitnist (accessed November 05 2020)
Ministry of Agrarian Policy and Food of Ukraine. State support for agriculture: government programs 2019. Available at: https://dotacii2019.minagro.gov.ua/ua (accessed November 05 2020)
Radchenko O. (2016). State support of agriculture of Ukraine in the period of systemic reforms. Economic Discourse, International Scientific Journal, 2, 47-53.
Moskov, V. (2020). THE IMPACT OF THE INVESTMENT CLIMATE ON THE ECONOMIC SECURITY OF UKRAINE. Economics, Finance and Management Review, (3), 72-78. https://doi.org/10.36690/2674-5208-2020-3-72.