Offer MSMEs financial coaching services

Policies Involved

Governor of DKI Jakarta Regulation No. 2 of 2020 on Integrated Entrepreneurship Development
Ministry of Cooperatives and MSMEs Regulation on MSME Business Training


MSMEs often lack the financial resources to adopt new technologies and build their own internal digital infrastructures. Although there are various financing policies and programs available for MSMEs, micro enterprises in particular suffer from higher loan rejection rates due to their higher risk profiles, coupled with limited financial reporting capabilities and lack of understanding of the qualifications and payment terms. Since existing regulations suggest that collateral is not required for MSMEs aiming to access KUR, banks have little way to mitigate the risks they are undertaking1 2.  This explains why, despite high program signup rates, graduates of Jakpreneur and other MSME development programs still find it challenging to obtain financing and grow their business.

Current Policy

The Governor of DKI Jakarta Regulation No. 2 of 2020 on Integrated Entrepreneurship Development facilitates potential entrepreneurs and entrepreneurs who participate in the Jakpreneur program with access to financing. One example of the financing options available for program participants is the People’s Business Credit program (translates to Kredit Usaha Rakyat or KUR). Based on information gleaned from the co-design workshop, partnership with Bank DKI has enabled Jakpreneur to facilitate KUR financing for more than 2400 program participants since 2018. However, the current regulation does not guarantee that all of the 300,000 Jakpreneur program participants will be successful at obtaining a loan or other sources of financing3.

Meanwhile, MSME business training run by organizations such as large businesses, higher education institutions or civil society organizations are not obliged to offer participating MSMEs specialized coaching to assist them in their financing applications. These programs do not use standardized curriculums and are often set up to meet the organizations’ own organizational goals, such as meeting the interests of non-profit donors or for large businesses to fulfill their corporate social responsibility (CSR).


Financial coaching services can help MSMEs to understand and reliably reveal the future prospects of their business digitalization to potential financiers. They may include banks and other financial institutions that provide loans, or government agencies and civil society organizations that offer small business grants. To achieve this, the government needs to offer MSME development programs (including Jakpreneur and business training by various organizations) incentives to provide their participants with specialized coaching for financing applications. Second, the programs need to verify whether the MSMEs have the potential and capacity to go digital. Third, the programs can help MSMEs to understand the different financing options, select ones that are best suited for their situation, and guide them through the application process. Upon acceptance, coaching responsibilities can be shared with or passed on to the lender or financier. Continuous coaching is important so that MSMEs can continue to learn to make sound business decisions and manage the cash in their business with confidence.

action points
parties involved
Incentivize MSME development programs to assist MSMEs with their financing applications
Ministry of Cooperatives and MSMEs
Provincial Government of DKI Jakarta
Office of Industry, Trade, Cooperatives, Small and Medium Business DKI Jakarta
Verify the business potential for going digital
Ministry of Cooperatives and MSMEs
Office of Industry, Trade, Cooperatives, Small and Medium Business DKI Jakarta
MSME development programs 
Access bookkeeping with MSME consent
MSME development programs
Coach and prepare MSMEs for financing applications
MSME development programs
Post-financing acceptance coaching 
MSME development programs
Banks and other financial institutions

Indicator of Success

Number of coached MSMEs
Number of coached MSMEs that successfully obtained financing
Number of coached MSMEs that successfully obtained unsecured loan
MSMEs’ non-performing loan ratio
MSMEs’ loan repayment rate
  1. The Coordinating Ministry of Economic Affairs Regulation No. 1 of 2022 on Guidelines on the Implementation of People’s Business Credit (KUR).
  2. KUR micro product is an unsecured loan product provided for MSME entrepreneurs.
  3. Jakpreneur. [accessed 17 May 2022]

For many entrepreneurs, the decision to turn into innovations depends on the ease to adopt technology, trained workforces, and multiple sources of finance. Yet, navigating the complex regulation is a major challenge for most lay business people. To expedite the economic recovery post-pandemic recession, the stakeholders in the ecosystem are urged to formulate the right policy to simplify such challenges.

— Kariem El-Ali, Senior Policy Advisor