CROWDFUNDING AS AN ALTERNATIVE SOURCE OF FINANCING SMALL AND MEDIUM ENTERPRISES – CASE OF NORTH MACEDONIA

Abstract

Small and medium enterprises are the backbone of the national economy. They are shaping a country’s economy because they have a significant contribution to the creation of job, added value, increasing export and innovation, poverty reduction etc. One of the most serious problems faced by SMEs is the lack of financial resources and limited access to alternative forms for business funding.  Considering this and the emergence of the economic crises in the world, the access to finance has become one of the most research topics.  In the Republic of North Macedonia, SMEs usually use 3F money (founders, family, friends) and traditional sources of financing, such as bank loans with high interest rates and complex procedures. Furthermore, SMEs have no alternatives for financing business activities due to underdevelopment of the capital market.

Crowdfunding is a new model for collecting funds through the Internet by "open invitation" to large number of investors with relatively small contributions.  Considering this, the main aim of the paper is to analyze crowdfunding as a source of SMEs financing in the Republic of North Macedonia. Therefore, a survey will be conducted on a sample of SMEs. The findings highlight that crowdfunding is a relatively new method of financing and most of the entrepreneurs are not familiar with the benefits of this form for business funding.