Abstract:

The purpose of this study is to contribute to entrepreneurial literature focussing on micro and small business profitability and their ability to gain debt financing with additional value insight from the Islamic Finance perspective. This is done by investigating the determinant factors such as SMEs characteristics and financial features that affect both business profitability and debt financing. The analyses identify the conditions under which suitable Islamic contracts can be used to finance SMEs in Indonesia. In doing so, the study identifies new form of collateral that can enhance in debt financing to SMEs.