Abstract

Financial problems are still one of the main challenges for business sustainability, especially at the micro and small level. This study aims to compare external sources of financing of micro and small businesses. The variables examined in this comparison include products, procedures, and services that are facilitated by Islamic financial institutions and conventional financial institutions. Primary data were collected through questionnaires which were distributed to business actors who met the research criteria. The purposive and random sampling techniques in this study require that respondents should be randomly selected, and they are business actors at the micro and small levels and use external financing from either Islamic or conventional financial institutions. The population of this research is micro and small business actors in one of the cities in Indonesia, namely in ​​Semarang area. A total of 183 data were collected and processed using the Mann Whitney-U test. The results of the study prove that there are significant differences between products, procedures, and services that are provided by Islamic financing and conventional financing sources. These findings are parts of efforts to support the sustainability of micro and small businesses through Islamic financing as well as the evaluation of financing provider to enhance their performance.