Strengthening Financial Planning for MSMEs: A Capacity-Building Program on Investment Risk and Illegal Lending

Abstract

Micro, Small, and Medium Enterprises (MSMEs) in Indonesia face persistent challenges in managing financial investment risks and accessing appropriate funding sources, particularly due to the prevalence of illegal online lending. These constraints not only undermine business resilience but also highlight the limited integration of financial literacy into effective financial planning. This study aims to strengthen the capacity of MSMEs in developing responsible financial planning and investment strategies, by incorporating financial literacy as a foundational element for improving risk awareness and decision-making. The program was implemented through mentoring activities involving lectures and technical assistance with members of the Sungai Jawi Women Farmers Group, who represent MSME actors in the food and beverage sector. Evaluation results demonstrate that the training significantly improved participants’ understanding of financial planning, including budgeting, investment decisions, and awareness of the risks of illegal lending. Beyond improving knowledge and attitudes, the program contributed to enhancing practical skills in preparing financial plans and allocating resources more prudently. These findings suggest that integrating financial literacy into structured financial planning programs can provide meaningful implications for policymakers, financial regulators, and community organizations in strengthening MSME resilience and sustainability.

Keywords: Risk; financial investment; illegal lending; financial planning