MSME Ministry: Business legality key to MSME financing access

The Ministry of Micro, Small and Medium Enterprises (UMKM) has stated that business legality is one of the keys for MSME players to obtain access to formal financing once their businesses begin to develop.

Secretary of the Ministry of UMKM Loto Srinaita Ginting, speaking at the Ministry of UMKM Media Communication Forum in Bogor on Friday, said legality becomes increasingly important because when a business starts to generate sales and repeat orders, the need for capital to grow the business will increase.

“Once a person has a business and it turns out they are starting to be able to sell and orders are beginning to come in, and repeat orders are starting to appear … that ultimately affects business capital,” she said.

Loto explained that the government has provided a number of financing schemes for MSME players, including Kredit Usaha Rakyat (KUR) and group lending schemes such as the Mekaar programme for women entrepreneurs.

However, Loto said that in order to access KUR, business players need to have a Business Identification Number (NIB) as a form of business legality.

According to her, business legality also makes the business profile of MSME players easier to recognise, including in terms of turnover, assets and business class.

This is considered important when business players need financing to increase business capacity.

In addition to financing, Loto mentioned that legality is also needed if MSMEs wish to expand market access through the procurement of goods and services, whether through the Government Goods/Services Procurement Policy Agency (LKPP) or procurement at state-owned enterprises (BUMN).

She assessed that this process requires comprehensive assistance, from skills improvement and legality processing to access to financing.

The Ministry of UMKM is also encouraging business players to join the SAPA UMKM application, which provides various services for business players, including capacity building, legality, and access to capital and financing.

As of 27 August 2026, the ministry recorded that more than 12.8 million MSME business data entries have been entered into SAPA UMKM, some of which came from data submitted by a number of institutions. Meanwhile, 16,378 business owners have installed and are actively using the SAPA UMKM application.