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We define constructive informal financing as those transactions that derive their information and enforcement technology from business or social relationships, mainly trade credits and family borrowing. This type of financing typically aims at supporting business operations and uses business or social relationships to reduce asymmetric information and to assist collection, recovery or recourse. The pricing of such loans considers the credit worthiness, collateral usage, and risk of production and recovery.

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Definition

Crowdfunding is a way for SMEs to raise money by collecting small amounts from many people. Instead of asking banks or big investors, SMEs can reach out directly to the public online to support their business or project.

Benefits

Access to Money: SMEs can raise funds without needing a loan or a good credit history.

Test the Market: If many people support the idea, it shows there is interest and demand.

Free Marketing: Campaigns help spread the word about the business and attract new customers.

Build a Community: Supporters often become loyal followers who want the business to succeed.

Reach More People: Online platforms allow businesses to connect with people around the world.

Less Risk: Since many people give small amounts, no single investor takes a big loss.

Helpful Feedback: Supporters often give useful ideas or suggestions for improvement.

Drawbacks

Lots of Competition: Many businesses are also crowdfunding, so it’s hard to stand out.

Takes Time and Effort: Running a campaign needs planning, promotion, and constant updates.

Fees Apply: Platforms usually take a cut from the money raised.

No Guarantee: If the goal isn’t reached, the business might get nothing.

Short-Term Funding: It helps once, but not for long-term business needs.

Giving Up Ownership: With equity crowdfunding, business owners may lose part of their control.

Legal Rules: Some crowdfunding types need to follow complex laws and paperwork.

Money Used Wrongly: Some businesses may use the funds just to survive, not to grow, which could upset backers.

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(1) Strained Personal Relationships

If the business fails or repayment is delayed, it can harm close personal relationships. In cultures where saving face and community ties are important, this can create long-term emotional stress.

(2)Limited Loan Amount

Friends and relatives can rarely provide the amount needed for business investment, especially for SMEs needing capital for expansion, equipment, or working capital.

(3)No Additional Business Support

Unlike formal lenders or SME banks, family and friends don’t offer business advice,

mentorship, or financial literacy — all of which SMEs need to grow sustainably.

(4)No Formal Agreement or Legal Protection

Borrowing is often based on trust, without contracts or legal terms. This can lead to misunderstandings or disputes if repayment is delayed or the business fails.

(5)Lack of Privacy in Financial Matters

Borrowing from family or friends often means exposing your personal or business problems to people in your social circle. This can be uncomfortable or shameful, especially in Myanmar’s conservative society.

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A bank loan is money borrowed from a bank that must be paid back with interest over a set time. Businesses use bank loans to pay for things like equipment, expansion, or cash flow problems.

Benefits of Bank Loans

1.Quick access to money – Get money fast when needed.

2.Does not give away ownership – Owner still fully its own business.

3.Have Fixed repayment time – Can know how long you have to repay

4. Can borrow large amounts – Banks can give big amount loans.

5.Cheaper than investors – No need to share future profits.

Drawbacks of Bank Loans

1.No flexibility – Must repay even during hard times with no excuse or flexibility.

2.Strict requirements – Banks want security like assets or good credit and need many documentation.

3. Can be hard to get for Small or new businesses and they might be rejected.

4. Can Affects credit score if late to pay credit and it can damage reputation of business

5. Can lead to bankruptcy  If unable to repay the big amount of debt and the business may shut down.

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1.Quick Access to Funds

2. Fewer formalities

3. Low or No Interest (in some cases)

4. Suitable for Emergency or Short-Term Needs

5. Negotiable Conditions

6.Less Financial Pressure

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Definition

Informal finance sources refer to non-institutional, unregulated ways of borrowing or accessing money, usually outside the formal banking and financial system. These sources are typically based on personal relationships, community trust, or local arrangements rather than legal contracts.

Benefits

Easy to access

Quick process / does not need paperwork and contract

Repayment schedule/ interest rates are flexible and negotiable

Does not need credit history

Helpful for people who are rejected by formal institution

Useful for small loans

Less stress and pressure

Drawbacks

Strained relationship မိတ်ဖြစ်ဆွေဖြစ်ပျက် (သတ်မှတ်ချိန်မဆပ်နိုင်,conflictဖြစ်)

Lack of legal protection(ရင်းနှီးတဲ့သူချင်းဆိုတော့စာချုပ်မရှိ interest rate, timeအတိအကျမရှိ conflict ဖြစ်

Limited funds (ကိုယ်လိုချင်သလောက်မရသူငယ်ချင်းမိသားစုဝင်တေစီကနေမရနိုင်တာရှိ)

Loss of respect or trust (ပြန်မဆပ်နိုင်ရင်guilt or pressure တေပိ trust တေမရှိကိုယ့် image ထိ

No business advice (တခြားinvestorတေလိုလုပ်ငန်းအတွက်အကြံတေမပေးနိုင်)

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Definition

Bank loans for SMEs in Myanmar refer to financial support provided by commercial banks and financial institutions to help small and medium-sized businesses fund their operations, expansion, equipment purchases, working capital, or other business needs.

Benefits

1. Lower Interest Rates (Compared to informal lenders): Myanmar banks offer lower rates than informal money lenders or loan sharks.

2. Flexible Loan Types: Banks offer various loan types (e.g. working capital loans, equipment loans) suited to business needs.

3. Longer Loan Tenures: Many SME bank loans offer long-term repayment options (e.g., 3–10 years), making it easier for businesses to repay gradually without high monthly pressure.

Drawback

1. Limited Access for Informal SMEs: Many small businesses operate informally without registration, making them ineligible for formal loans.

2. High Rejection Rate: Due to lack of formal documentation or credit history, many SMEs in Myanmar are denied loans.

3. Collateral Needed: Banks often ask for land, property, or other assets as security—many SMEs don’t have enough.

Members

1. Ingyin Phyu

2. Moe Thet Kyaw

3. Su Myat Zin Hlaing

4. Aye Myat Moe

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Defination

Venture capital (VC) is a type of private equity used to support startups and early-stage companies with the potential for substantial and rapid growth.

Benefits

1.Necessary Capital

2.share good experience between the investors

3.have good network connection

4.Mrket Validation

5. Global expansion opportunity

6.no repayment obligation

Drawbacks

1.Lost of control

2.New structural reorganisation

3.Diminished owernarship

4.focus on shortterm goal

5.comlex organization culture

6.competative environment

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Government Initiatives for SME Financing means that because SMEs cannot easily get large loans from other sources, the government provides special loans, tax reductions for businesses, and creates job opportunities for them.

1.Because the government has to provide loans, it can put pressure on public finances.

2.If many SMEs cannot repay the loans provided by the government, there will be financial losses.

3.Since the government supports many SMEs, there can be delays and inefficiencies in the loan distribution process.

Benefits

1.SMEs are a major force in global employment, so when the government provides support, it can significantly boost job creation and economic growth.

2.During natural crises or economic downturns, businesses may struggle or be on the verge of shutting down, but government assistance can help them survive.

3.When the government reduces financial burdens, it encourages new innovations and supports the emergence of more entrepreneurs.

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Group 4

Definition: Venture Capital ဆိုတာကတော့စီးပွားရေးလုပ်ငန်းအသစ်တွေ၊ တိုးတက်ဖို့ potential ရှိတဲ့လုပ်ငန်းတွေကို investor တွေပိုင်ရှင်အဖြစ် ပါဝင်ဖို့နဲ့ အကျိုးအမြတ်ရဖို့ ရင်းနှီးမြှုပ်နှံတဲ့ငွေ ဖြစ်ပါတယ်။

Startupလုပ်ငန်းတွေ မှာ အရေးကြီးတယ်။ ငွေချေးတဲ့ပုံစံ မဟုတ်ဘဲ လုပ်ငန်းထဲကို ရှယ်ယာအဖြစ် (Equity) invest လုပ်တယ် Investors တွေက သူတို့ရဲ့အကြံဥာဏ်၊ အတွေ့အကြုံ တွေကို provide လုပ်ပေးတယ်။ အောင်မြင်ရင် မူလပိုင်ရှင်တွေနဲ့အတူ VC တွေလည်း profit တူတူရကြတယ်။ ဥပမာ app တစ်ခုရှိတဲ့ လူငယ်တစ်ဦးက idea ရှိပေမယ့် ငွေမရှိချိန်

VC က သူ့ idea ကို ကြိုက်လို့ $100,000 ရင်းနှီးပေးတယ် အဲ့အခါVC က အဲ့ဒီလုပ်ငန်းရဲ့ 20% ကိုပိုင်သွားတယ်။

နောက်ပိုင်း app က အောင်မြင်ပြီးတန်ဖိုးရှိလာလေ VC ကလည်းprofit ပိုရလေဖြစ်တယ်။

Benefits:

1.Capital ကိုလိုသလောက်ယူလို့ရတယ် SMEs ချေးငွေတစ်ခုလို ချက်ချင်းပြန်ဆပ်စရာမလိုသလို အတိုးလည်းပေးစရာမလိုဘူး။

2.Investors တွေက diverse background တွေရှိပြီး သူတို့ဆီက experiences တွေ expert advices တွေကိုလည်းရရှိနိုင်တယ် လုပ်ငန်းအတွက် reputation တိုးလာနိုင်တယ်။

3.ခိုင်မာတဲ့ funding, job security, and growth potential တွေကြောင့် skilled professionals တွေကို ဆွဲဆောင်နိုင်တယ်။

Drawbacks:

1.VC တွေဆီက အဓိက funding ရနေတဲ့အတွက် သူတို့က control ပိုလုပ်လာပြီး pressure ပေးနိုင်တယ် ကိုယ်တိုင် full control မရနိုင်ဘူး။

2.VC တွေကနောက်ပိုင်း ကိုယ်လုပ်နေတဲ့ structure ကိုသဘောမတူဘဲ သူတို့စိတ်ကြိုက်ပြောင်းလဲချင်တာတွေ လုပ်လာနိုင်တယ်။

3.Diminished ownership ဖြစ်လာနိုင်တယ် ဥပမာ VC တွေက တခြား investors အသစ်တွေခေါ်လာတဲ့အခါမှာ ပိုင်ရှင်က ခွဲဝေတာရရှိမှု % နည်းသွားနိုင်တယ် တစ်နည်းအားဖြင့် မူလပိုင်ရှင်ရဲ့ ပိုင်ဆိုင်မှု (ownership percentage) တဖြည်းဖြည်းလျော့နည်းလာခြင်း ကို ဆိုလိုတယ်။

Members :

Thinzar Maw

Htay Yadanar Win

Thin Thin Myat Soe

May Thu Thu Kyaw

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Definition

Small-scale financial services, offer loans to who are lack of access in traditional banking service especially individuals or small businesses, Targets low income SMEs and micro-entrepreneurs in developing or underserved regions

Benefits

Poverty reduction- offer loans to small businesses with low capital to improve income and living standards

Job creation- As the small businesses grows, employment opportunities are high

Community development- if the small businesses success, local economic will grow and develop

Drawbacks

Over Indebtedness- SMEs might take multiple loans from different lenders and they might struggle to repay

High interest rates- Lenders will charge higher interest rates than traditional banks

Misuse of funds- the borrowers might use loans for personal uses

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Microfinance is a term for financial services that are offered to individuals of lower socioeconomic backgrounds or those who lack access to traditional financial services. Microfinance includes a number of services, such as savings accounts, checking accounts, fund transfers, microinsurance, and microcredit.

Microfinance originally started with microcredit. Its goals include to promote economic development, decrease unemployment, and boost small businesses.

Benefits

1. Access to Capital:

SMEs often struggle to get loans from banks. Microfinance gives them easier access to small loans to start or grow their business

2. Flexible Loan Terms:

Repayment terms are often more flexible than traditional bank loans.

3. Financial Discipline:

Regular repayment schedules promote budgeting and money management habits.

Encourages borrowers to save and plan for the future.

4. Community Development:

When individuals thrive financially, they contribute more to their communities.

Leads to better education, healthcare, and housing outcomes in the long term.

Drawbacks

1. High Interest Rates:

Microfinance institutions often charge higher interest than banks due to higher risk and operating costs.

2. Limited Loan Size:

The loan amounts are small, which may not be enough for some medium-sized businesses.

3. Short Repayment Periods:

Some SMEs may find it hard to repay loans quickly, especially if their business cycle is slow.

Some local microfinance examples are

1. Proximity Finance

One of Myanmar’s largest microfinance institutions.

Offers small loans to rural farmers and entrepreneurs.

Focuses on agricultural and seasonal loans.

Aims to improve livelihoods in rural areas by promoting financial inclusion.

2. Pact Global Microfinance Fund (PGMF)

Operated by Pact Myanmar, one of the earliest and largest microfinance providers in the country.

Offers group and individual loans to low-income women.

Focuses on social empowerment and rural development.

Active in many states and regions across Myanmar.

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Definition

Government initiatives for SME financing aim to improve access to funding for small and medium-sized enterprises (SMEs) by addressing financing gaps and challenges. Banks often prefer large businesses and are reluctant to lend to SMEs due to factors like lack of collateral, limited credit history, and being considered high-risk borrowers. Governments support SMEs through loan guarantees, low-interest loans, grants, and other financial assistance, enabling them to grow, create jobs, and contribute to the national economy.

Benefits

More Jobs: Helps small businesses hire more people.

Less Poverty: Steady work means families earn a living.

New Wealth: Successful SMEs create profits that stay in the community.

Better Food Supply: Farm-based SMEs boost local food production and security.

Innovation & Skills: Training and funding let entrepreneurs try new ideas and learn better methods.

Stronger Economy: A healthy SME sector makes the whole country more stable and grows its GDP.

Drawbacks

Favoritism: Funds may go to connected businesses rather than the most deserving.

Insufficient Coverage: Not enough money for all applicants, leaving many without help.

Dependency Risk: Firms may rely too much on aid and not build their own resilience.

Complex Rules: Strict conditions and criteria can be hard for small owners to meet.

Misallocation of funds:Some businesses may misuse funds or apply without genuine need.

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Definition

Trade credit is a form of commercial financing extended by suppliers to the buyers for the purchase of goods or services without immediate cash payment with the agreement that the buyer will pay at a later date.

Benefits

More cash on hand

Interest free

easier to obtain

Increase inventory

Boots business growth

Reduced Risk

Flexibility in Payment Terms

Get discounts for early payment

Drawback : risk of late payments fees,

loss of early payments discount,

may affect creditworthiness,

Suppliers May Refuse Credit to Start-Ups,

short repayment terms,

may affect supplier relationships,

Pressure on cash flow,

Legal action

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Def:

short-term Financing method, supplier agree to sell goods or services to a buyer without requiring immediate paynent.

Benefit:

Improve Cash Flow: without immediate payment , allowing buyers to manage working capital more effectively

Interest free or low interest:

If paid within the agreement period

Build supplier relationship:

Reliable payment can lead to better terms, trust, and priority service.

Potential for Discounts:

Some suppliers offer discounts for early payment

No Collateral Needed:

Doesn’t need required assets as security

Drawbacks

Late payment penalties:

Missing due date can result in higher interest

Dependency on Suppliers

If a supplier suddenly tightens credit, cash flow problems may arise

Lack of relationships

If a payment can’t meet at deadline, can lack of trust and bad in relationships

Potential for higher costs:

Some suppliers inflate prices to compensate for credit risk

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Crowdfunding is a way of raising money to finance projects and businesses. It enables fundraisers to collect money from a large number of people via online platforms.

Advantage's

crowdfunding helps test product demand quickly before invest heavily in production or development

Access to capital without Traditional Barriers

Flexible funding options

Disadvantage

Time-consuming

public Disclosure

Reputation Risk

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A way of raising funding to finance project and business It enables fundraisers to collect money from a large number of people via online platforms

Pros

Access to capital without traditional barriers

Crowdfunding helps test products demand quickly before invest heavily in production or development

Flexible Funding options - offer various models allowing SMEs to choose the one that best suits their needs regarding ownership

Faster capital raising- compared to banks, crowdfunding campaigns can raise funds relatively quickly

Drawback

Public disclosure- competition rising

Reputation risk

Variety of regulatory compliance

Time-consuming