The Importance of Microcredit for Small Entrepreneurs (KUR)

Small entrepreneurs worldwide, including in Indonesia, play a crucial role in economic growth. They create job opportunities, drive innovation, and make significant contributions to the economy.

However, small entrepreneurs often face various challenges in developing their businesses, including financial issues. This is why the People’s Business Credit or “Kredit Usaha Rakyat” (KUR) program exists to assist small entrepreneurs in gaining access to the necessary financing.

What is People’s Business Credit or KUR?


KUR, or People’s Business Credit, is an Indonesian government program aimed at providing financing to small and micro-entrepreneurs. The program is managed by Bank Indonesia (BI) and has been in operation for several years. KUR aims to support small entrepreneurs in developing their businesses, increasing productivity, creating job opportunities, and reducing poverty.

One notable aspect of KUR is its low-interest rates. KUR offers interest rates lower than regular commercial loans, making it more affordable for small entrepreneurs who often struggle to meet the credit requirements of private banks. This is one reason why this program is crucial for the small and micro-business sector in Indonesia.

Benefits of KUR for Small Entrepreneurs

The KUR program has various significant benefits for small entrepreneurs. Below, we will detail these benefits comprehensively:

Easy Access to Financing

One of the main benefits of KUR is providing small entrepreneurs with easier access to financing. This is crucial as small entrepreneurs often face difficulties securing loans from private banks with stricter requirements.

Low-Interest Rates

KUR offers low-interest rates, making the cost of borrowing more affordable. With competitive interest rates, small entrepreneurs can allocate more resources to the development of their businesses.

Flexible Tenure

The KUR program also provides flexible tenure, allowing entrepreneurs to choose the loan period that aligns with their business plans. Entrepreneurs can select tenures ranging from several months to several years.

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Mentoring and Training

In addition to financing, KUR often offers mentoring and training. This helps small entrepreneurs manage their businesses more effectively. Training includes business management, bookkeeping, and skill enhancement to aid in business development.

Increased Production Capacity

With access to adequate financing, small entrepreneurs can enhance their production capacity. This is a key step in business development, allowing them to meet larger demands and generate higher income.

Support for Women Entrepreneurs

KUR also pays special attention to women entrepreneurs. This can help reduce gender gaps in the business world and enhance the economic empowerment of women.

Encouragement of Innovation


The program encourages innovation. With access to adequate financing, small entrepreneurs can develop new products and services, create new business opportunities, and advance the economic sector.

Poverty Reduction

One of KUR’s primary goals is poverty reduction. By providing access to financing, the program helps small entrepreneurs who may have struggled to meet their basic needs.

Local Economic Diversification

KUR assists in diversifying the local economy by supporting various small business sectors. This reduces dependence on specific economic sectors.

How to Access KUR

Accessing the KUR program is an important initial step for small entrepreneurs in need of additional funds to develop their businesses. Here are the steps you need to follow:

Identify Your Needs

Firstly, you must clearly identify the financial needs of your business. How much funding do you require, and for what purpose? Whether expanding production, upgrading equipment, or funding specific projects, carefully identify these needs.

Prepare the KUR Proposal

Once you’ve identified your needs, the next step is to create a comprehensive KUR proposal. This proposal should include a clear business plan, a detailed explanation of fund utilization, and return on investment estimates. A well-prepared proposal enhances your chances of approval.

Choose a Bank or Financial Institution

KUR is channeled through various banks and financial institutions partnering with Bank Indonesia. You need to choose a bank or financial institution that aligns with your needs and preferences. Be sure to compare different options and understand the terms and conditions applicable to each.

Submit KUR Application

Submit your credit application with your KUR proposal to the chosen bank or financial institution. Ensure that your proposal is complete and meets the specified requirements.

Assessment Process


After submitting your application, the bank or financial institution will conduct an assessment process, involving an analysis of your proposal. They will evaluate the feasibility of your business and your ability to repay the loan.

KUR Approval

If your proposal meets the requirements, you will receive KUR credit approval from the bank or financial institution you applied to. This is a crucial step that allows you to obtain the necessary funds for your business.

Utilize KUR Funds Wisely

Once the funds are approved, use them wisely according to the business plan outlined in your proposal. Be sure to allocate the funds to the goals specified in your proposal.

Loan Repayment

During the credit tenure, manage your installment payments well. Timely and proper repayment ensures a smooth relationship with the bank or financial institution.

The People’s Business Credit or KUR program is a significant initiative supporting small and micro-entrepreneurs in Indonesia. With low-interest rates, flexible tenures, and other benefits, the program helps small entrepreneurs develop their businesses and contribute to local economic growth. However, the program also faces challenges and criticisms that need to be addressed to ensure its effectiveness.

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KUR has assisted thousands of small entrepreneurs nationwide in achieving their dreams and contributing to the Indonesian economy. To reap the benefits of this program, small entrepreneurs must understand the requirements, submit solid proposals, and manage credit wisely. This way, KUR can become a crucial tool in building a brighter future for small entrepreneurs in Indonesia.

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