Literature Review on Financing Preferences among Small And Medium Enterprises

The increasing importance of economic contributions of small and medium-sized enterprises (SMEs) around the world motivated a better understanding of financial practices among SMEs. An understanding of the financial practices of SMEs is essential in developing a supportive financial framework to achieve national agenda for improving SMEs sustainability and increasing the overall SMEs' contributions to the economy, This paper review relevant literatures on the financial practices among SMEs particularly on the area of financing preferences among SMEs' owner/manager. Focuses are given on the nature of small business finance, financial practice and managerial characteristics, indicators used in understanding SMEs financing preferences and relationship between owner/manager characteristics with the firm's financing preferences towards different sources of financing. This article will improve understanding and will enable further enhancement of knowledge in this area of financial practices among SMEs.