FINANCING ALTERNATIVES TO SMALL MEDIUM-SIZED ENTERPRISES IN ALBANIA

Small medium-size enterprises account about 98 percent of total business in Albania and contribute to more than 70 percent of GDP and more than 50 percent of employment. As in other developing countries, small medium enterprises in Albania are facing several difficulties: administrative barriers, lack of qualified work force, technology innovation, capital shortage, informality, small markets etc. The paper will be focused on one of those problems: financing alternatives. Actually the most used financing sources of these businesses in Albania are the retained earnings or the internal funds. Does it come because of Albanian owners' mentality or because of the lack of other financing alternatives, or the inability of the business to provide external financing? The aim of this paper is to describe the alternative financing forms used by small and medium-sized businesses in Albania, pointing out the reasons of their utilization. Based on a questionnaire data analysis, the paper will conclude with some recommendations toward the business, the financial institutions and the government as well, in order to improve the business environment in Albania regarding the financing facilities.