The Factors Influencing MSME Credit Application Decisions at Bank BPD

Abstract

This study looks at the impact of credit procedures, collateral, credit requirements and interest rates on MSME credit application decisions at PT BPD Kaltimtara, East Kalimantan, Indonesia. A quantitative explanatory design was used with primary data collected via both online and offline questionnaires between April and June 2025. A purposive sampling technique was used which produced 133 valid responses from MSME operators who have experience in applying for bank credit. The data were analysed using multiple linear regression, with validity, reliability and classical assumption tests also conducted. The results show that credit procedures do not have a significant effect on MSME credit application decisions, suggesting that the ease of the credit procedures is not a major factor when the MSME has a significant need for credit. Collateral, credit requirements and interest rates all have a positive and significant effect on credit application decisions. Credit requirements are the most important of the four variables. The four independent variables taken together have a significant effect on the decision to apply for credit and explain 49.1% of the variation in the dependent variable. The findings point to the need for a more integrated approach to improving MSME access to formal credit with an emphasis on having accessible credit requirements, flexible collateral and competitive interest rates. The study makes a contribution to the understanding of MSME financing behaviour and has practical implications for regional banks in their efforts to improve financial inclusion and support the sustainable development of MSMES