ALTERNATIVE METHODS OF SMALL BUSINESS FINANCING IN UKRAINE

  • Alla Heidor Kyiv National University of Trade and Economics
  • Nataliia Dobizha West Ukrainian National University
  • Halyna Pohrishcuk West Ukrainian National University
Keywords: alternative methods of financing, small business, small business finance, capital structure of small enterprises

Abstract

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.

Author Biographies

Alla Heidor, Kyiv National University of Trade and Economics

PhD (Economics), Associate Professor, Department of Economics and Business Finance, Faculty of Economics, Management and Psychology, Kyiv National University of Trade and Economics, Kyiv, Ukraine

Nataliia Dobizha, West Ukrainian National University

Doctor of Economics Sciences, Associate Professor, Department of Banking Finance and Insurance, West Ukrainian National University, Vinnytsia Educational and Research Institute of Economics, Vinnytsia, Ukraine

Halyna Pohrishcuk, West Ukrainian National University

Doctor of Economics Sciences, Associate Professor, Department of Banking Finance and Insurance, West Ukrainian National University, Vinnytsia Educational and Research Institute of Economics, Vinnytsia, Ukraine

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Published
2020-12-07
How to Cite
Heidor, A., Dobizha, N., & Pohrishcuk, H. (2020). ALTERNATIVE METHODS OF SMALL BUSINESS FINANCING IN UKRAINE. Economics, Finance and Management Review, (4), 43-52. https://doi.org/10.36690/2674-5208-2020-4-43
Section
Chapter 2. Development of Finance, Accounting and Auditing