The Model of Crowdfunding to Support Small and Micro Businesses in Indonesia Through a Web-based platform

Economy crisis that hit Indonesia in the year 1997/1998 and 2008/2009 shows that small and medium-sized businesses have proven as a self-sufficient business group that has a strong resistance. Unfortunately, these independent business groups, especially small and micro businesses that have low income are not easy to get capital or financing from the banking institutions due to lack of financial history. One of the funding solutions to small and micro businesses is microfinancing. There are some institutions in Indonesia that have already engaged in microfinancing, but none of them have maximized the use of internet technology, particularly the use of interactive and social media sites that have the ability as a catalyst and mobilizer of the mass. In this study, we would like to propose a microfinancing business model to fund micro-businesses involving donors/funders, volunteers, field partners, coaches and non-profit organizations that work together in the process of screening, supervising, and managing the use of funds. This model is adapted to the behavior of Indonesian society, raising the confidence of lenders and the transparency of partners and organizations so that funds can be distributed to the right persons, be managed in an appropriate manner so as to improve the quality of life for borrowers and to achieve the highest possibility of refund rate. This business model will be implemented through a web-based system that enables all parties involved to communicate and support each other. (C) 2012 The Authors. Published by Elsevier Ltd.