Juridical Analysis Of Giving Credit To Small Business With Unfavited Land Guarantee (Study: PT. Bank Sumut, Sub -District Lalang Kampung Branch)

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Juridical Analysis of Credit Giving to Small Business with Unfavorable Land Guarantee (Study: PT. Bank Sumut, Sub-District Lalang Kampung Branch)

Introduction

The issue of access to credit for small and medium businesses (SMEs) in Indonesia remains a pressing concern. This problem is further exacerbated by the fact that many SMEs face obstacles in terms of ownership of assets in the form of certified land. In this context, the practice of binding credit with unfavorable land guarantees is one of the solutions that can be studied further. This article aims to provide a juridical analysis of the credit giving process to SMEs with unfavorable land guarantees, with a focus on the study conducted by PT. Bank Sumut, Sub-District Lalang Kampung Branch.

Background

Law Number 4 of 1996 concerning Underwriting Rights provides opportunities for SMEs to access credit with land guarantees that have not been registered. This provision opens the way for SMEs that have land resulting from the conversion of old rights, to apply for credit by including proof of payment of Land and Building Tax (PBB) as an attachment material. If the United Nations has not been issued, UKM can submit a certificate from the relevant village/village. Another additional requirement is a certificate of absence of dispute over the land.

The granting of mortgage rights must be carried out simultaneously with the application for registration of land rights. UKM is also required to make a power of attorney to impose a mortgage rights, and subsequently make the deed of granting of mortgage rights no later than three months after the power of attorney charges the Mortgage Rights given.

The Role of PT. Bank Sumut in Providing Credit to SMEs

In general, the small business credit program offered by PT. North Sumatra Bank has opened up opportunities for SMEs to get credit access with lower interest rates. However, in practice, the process of channeling small business credit is faced with several obstacles. The time needed to process the debtor's request is relatively long, so that the credit distribution process is not optimal.

In addition, many SMEs do not have administrative completeness such as the Company Establishment Deed, Trading Business License, Taxpayer Identification Number, and Company Registration Certificate. This is of course one of the factors inhibiting access to credit for small businesses.

Obstacles Faced by SMEs in Accessing Credit

Related to the obstacle in the process of lending, another factor that needs to be considered is the lack of collateral or guarantees that can cover the loans needed. Many SMEs are still running their business with traditional principles without having an official/legal business entity in accordance with the provisions, so that it collides on the problem of legality and business licensing.

Therefore, the role of mentoring institutions is very important in guiding and giving examples of the principles of modern management to SMEs. With the right assistance, it is expected that SMEs can develop their businesses and be able to make official business licenses.

Capital Limitations and the Need for Financing Assistance

Capital limitations are generally a problem faced by SMEs, so that their ability to develop businesses is limited. Therefore, the development of small businesses is very dependent on the availability of financing assistance from banks or other non-sacrificial financial institutions.

Conclusion

Based on the analysis above, it can be concluded that the granting of credit to SMEs with a guarantee of land is not certified is a solution that is worthy of further study. However, some obstacles need to be handled seriously, such as accelerating the credit distribution process, assistance for SMEs to complete the administration and legality of its business, as well as the need for financing support from financial institutions to help develop small businesses.

With joint efforts from various parties, it is expected that access to credit for SMEs in Indonesia can be increased, so that SMEs can grow and develop into the backbone of the national economy.

Recommendations

  1. Accelerating the Credit Distribution Process: The credit distribution process should be accelerated to ensure that SMEs can access credit in a timely manner.
  2. Assistance for SMEs to Complete the Administration and Legality of its Business: SMEs should be provided with assistance to complete the administration and legality of its business, including obtaining the necessary licenses and permits.
  3. Financing Support from Financial Institutions: Financial institutions should provide financing support to SMEs to help them develop their businesses.
  4. Mentoring Institutions: Mentoring institutions should play a role in guiding and giving examples of the principles of modern management to SMEs.
  5. Capacity Building: Capacity building programs should be implemented to enhance the skills and knowledge of SMEs in managing their businesses.

Future Research Directions

  1. In-depth Analysis of the Credit Giving Process: An in-depth analysis of the credit giving process should be conducted to identify the key factors that affect the access to credit for SMEs.
  2. Development of a Credit Guarantee Scheme: A credit guarantee scheme should be developed to provide guarantees to SMEs that are unable to provide collateral.
  3. Implementation of a Mentorship Program: A mentorship program should be implemented to provide guidance and support to SMEs in developing their businesses.
  4. Capacity Building for Financial Institutions: Capacity building programs should be implemented to enhance the skills and knowledge of financial institutions in providing financing support to SMEs.

Conclusion

In conclusion, the granting of credit to SMEs with a guarantee of land is not certified is a solution that is worthy of further study. However, some obstacles need to be handled seriously, such as accelerating the credit distribution process, assistance for SMEs to complete the administration and legality of its business, as well as the need for financing support from financial institutions to help develop small businesses. With joint efforts from various parties, it is expected that access to credit for SMEs in Indonesia can be increased, so that SMEs can grow and develop into the backbone of the national economy.
Frequently Asked Questions (FAQs) on Juridical Analysis of Credit Giving to Small Business with Unfavorable Land Guarantee

Q1: What is the main problem faced by small and medium businesses (SMEs) in Indonesia?

A1: The main problem faced by SMEs in Indonesia is the lack of access to credit, which is further exacerbated by the fact that many SMEs face obstacles in terms of ownership of assets in the form of certified land.

Q2: What is the role of Law Number 4 of 1996 concerning Underwriting Rights in providing opportunities for SMEs to access credit?

A2: Law Number 4 of 1996 concerning Underwriting Rights provides opportunities for SMEs to access credit with land guarantees that have not been registered. This provision opens the way for SMEs that have land resulting from the conversion of old rights, to apply for credit by including proof of payment of Land and Building Tax (PBB) as an attachment material.

Q3: What are the requirements for SMEs to apply for credit with an unfavorable land guarantee?

A3: The requirements for SMEs to apply for credit with an unfavorable land guarantee include:

  • Proof of payment of Land and Building Tax (PBB)
  • Certificate from the relevant village/village (if the United Nations has not been issued)
  • Certificate of absence of dispute over the land
  • Power of attorney to impose a mortgage rights
  • Deed of granting of mortgage rights no later than three months after the power of attorney charges the Mortgage Rights given

Q4: What are the obstacles faced by SMEs in accessing credit?

A4: The obstacles faced by SMEs in accessing credit include:

  • Lack of collateral or guarantees that can cover the loans needed
  • Incomplete administrative documents, such as the Company Establishment Deed, Trading Business License, Taxpayer Identification Number, and Company Registration Certificate
  • Traditional business principles without an official/legal business entity in accordance with the provisions

Q5: What is the role of mentoring institutions in guiding SMEs?

A5: The role of mentoring institutions is to guide and give examples of the principles of modern management to SMEs. With the right assistance, it is expected that SMEs can develop their businesses and be able to make official business licenses.

Q6: What is the importance of capacity building for SMEs?

A6: Capacity building is essential for SMEs to enhance their skills and knowledge in managing their businesses. This includes developing their financial management skills, marketing strategies, and human resource management.

Q7: What is the role of financial institutions in providing financing support to SMEs?

A7: Financial institutions play a crucial role in providing financing support to SMEs. They should provide financing support to SMEs to help them develop their businesses, and also provide guidance and assistance to SMEs in managing their finances.

Q8: What are the future research directions in the area of juridical analysis of credit giving to SMEs?

A8: The future research directions in the area of juridical analysis of credit giving to SMEs include:

  • In-depth analysis of the credit giving process
  • Development of a credit guarantee scheme
  • Implementation of a mentorship program
  • Capacity building for financial institutions

Q9: What is the expected outcome of the juridical analysis of credit giving to SMEs?

A9: The expected outcome of the juridical analysis of credit giving to SMEs is to increase access to credit for SMEs in Indonesia, so that SMEs can grow and develop into the backbone of the national economy.

Q10: What are the recommendations for policymakers and financial institutions?

A10: The recommendations for policymakers and financial institutions include:

  • Accelerating the credit distribution process
  • Providing assistance for SMEs to complete the administration and legality of its business
  • Providing financing support from financial institutions to help develop small businesses
  • Implementing a mentorship program to guide SMEs in developing their businesses
  • Capacity building for financial institutions to enhance their skills and knowledge in providing financing support to SMEs.