Government Grants for Businesses in Indonesia

Government Grants for Businesses in Indonesia

Deskera Content Team
Deskera Content Team
Table of Contents
Table of Contents

Indonesia is regarded as a hub of small businesses. As per the statistics, Micro, Small, and Medium Enterprises (MSMEs) account for around 99 percent of existing businesses in Indonesia and employ more than 95 percent of the industry's total workforce.

But, despite these large numbers, MSMEs in Indonesia were deprived and marginalized with a broader market due to factors like lack of sources, less access to finance, and human sources.


But now, in today's time, and by today's time, we mean COVID times, the business needs to harness digital technology combined with proactive policy by the government.

With this view, the Indonesian government has launched programs and initiatives to empower MSMEs and level up them into new value chains.

In this article, we will cover the list of grants and processes to obtain along with:

• Introduction about Grants

• How Indonesian government is enhancing MSME growth through grants

• List of grants offered by the government

• Process to obtain grants

• How to apply and register for grants

•How can Deskera help small businesses

Introduction about Grants

Government grants are a reward or an initiative offered by the government authority for a particular purpose or a project. With the help of grant programs, the government provides funding for businesses, institutions that help in stimulating the economy.

The government grants are set for businesses, including short, medium enterprises (SMEs). Therefore, it helps to encourage the development of MSMEs that can drive the path towards economic growth and national economic recovery.

Grants also aim to empower the small businesses through profits and provide work to people who lost income due to the pandemic.

How the Indonesian government is enhancing MSME growth through grants

MSMEs are the critical pillars of the Indonesian economy. To grow the sector substantially, the government issued a policy for the development of MSMEs named the MSME Development Program to re-growth the businesses under the National Economic Policy.

The grants were in the form of providing loans through banks and cooperatives, simplifying credit policy for the funding, and loan repayment relief for MSMEs.

By providing the digital platform, simplifying and digitalizing the process, the government encourages MSME players to come into the market, avail the grants, run the business with ease and make necessary product or service adaptations.

These grants also encourage the digitalization of normal business operations like processing, invoicing, billing, payment, and administration.

Thus, through these grants, subsidies, and initiatives, the Indonesian government intends to help the country's SMEs to improve their productivity level and experience a growth rate similar to that of the large enterprises.

List of grants offered by the government

The Government of Indonesia announced subsidization and programs as grants for the MSMEs. With the help of these programs, the government aims to provide assistance to the businesses, structure the placement of funds, allocate well and digitalize the process entirely. It will help the business increase its business operations, earn more profits, and significantly contribute to the economy's growth.

The list of programs offered by the Indonesian government in support of MSMEs are as follows:

  1. Credit for Businesses ( Kredit Usaha Rakhyat)
  2. Startup Incubator Program
  3. Micro Business and Government microloan Program (KUR)
  4. Loan Repayment borrowed from KUR Program
  5. National Economic Recovery Program Assistance
  6. Direct assistance program (BLT)
  7. E-brochure Program
  8. UMKM Tax Incentives
  9. UMKM Credit Restructuring
  10. Working Capital Policy
  11. UMKM Working capital credit guarantee scheme

1. Credit for Businesses ( Kredit Usaha Rakhyat)

The Credit for Business Grant is an initiative launched by the government with the help of Non-Profit organizations.

The grant aims to provide credit, working capital, and investing financing plans for various MSMEs. The program can be specifically tailored, made, and modified based on the requirements of the SME.

Overall, it helps to serve the financial needs across Indonesia.

2. Startup Incubator Program

The Startup Incubator Program was launched in collaboration with the Ministry of Corporate affairs and SME of Indonesia.

The program is intended to promote local entrepreneurship throughout the country. It has direct access and connections to several SME-related grants provided by the government.

3. Micro Business and Government microloan Program (KUR)

This grant aims to provide microloans to the borrowers between

  • Rp 10 million to 500 million with interest subsidy covering 6% for the first three months and 3% for the next three months
  • Rp 500 million to RP 10 billion with interest subsidy covering 3% for the first three months and 2% for the next three months

Also, both categories have a provision to delay their loan repayments up to 6 months.

4. Loan Repayment borrowed from KUR Program

This grant is associated with the previous grant.

To help the micro-businesses repay the loan interest, the grant aims to help SMEs repay borrowing up to Rp 500 million from rural banks and borrowing up to Rp 500 million to RP 10 billion from conventional banks.

The grant also aims to relieve the interest payments for the SMEs who borrowed from the KUR program.

5. National Economic Recovery Program Assistance

The national recovery program aims to provide financial assistance for MSMEs. As per the table given below, the amount is allocated for six different activities starting from interest subsidies to investment financing, along with allocated funds borne by the government.

Types of National Economic Recovery Program Assistance for MSMEs (Rp)


Fund Allocated

  1. Interest subsidies

35,68 Trillion

  1. Placement of funds for credit restructuring

78,78 Trillion

  1. Expenditure for guarantee services fees

5 Trillion

  1. Guarantee for working capital

1 Trillion

  1. Government borne final income tax

2,4 Trillion

  1. Investment financing to cooperative through the LDPB

1 Trillion


123,47 Trillions

6. Direct assistance program (BLT)

The government launched the Direct Assistance Program for MSMEs. In this program, businesses will receive the assistance of 24 million.

The goal of the program is to strengthen the business resilience of the MSMEs. The scheme aims to ease the working mechanism for smooth assistance submission.

7. E-brochure Program

The e-brochure program helps to introduce MSMEs to the online market. The Ministry of Cooperatives launched the program in collaboration with Smesco Indonesia.

The program aims to provide a digital market and platform for MSME products. It also seeks to create a catalog of all those products throughout Indonesia.

8. UMKM Tax Incentives

The UMKM tax incentives were issued by the Ministry of Finance concerning tax incentives for the taxpayers affected by the covid-19. The incentive brings the advanced taxpayers into the advantage, and with this, the final PPh (Income Tax) of 0.5 % for MSME players is borne by the government or may be exempted.

9. UMKM Credit Restructuring

The UMKM Credit Restructuring comes under the Ministry of Finance Regulation concerning the following:

  • Procedures for providing interest subsidies and margin subsidies for financing the MSME
  • Procedures for providing interest subsidies and margins subsidies credit facility to MSME

Both of the procedures come under the National Economic Recovery Program laid by the Indonesian government

10. Working Capital Policy

The working capital policy aims to provide low-cost working capital loans to MSMEs in deposits or demand deposits in collaboration with commercial banks.

The government places funds for IDR 30 million for six months to accelerate the provision of credit to MSME specifically belonging to labor-intensive industries.

Through this policy, the government aims to push the economic recovery of the public belonging to the lower classes.

11. UMKM Working capital credit guarantee scheme

The UMKM Working Capital Credit Guarantee Scheme is also regulated by the Ministry of Finance Regulation concerning the credit guarantee to the MSMEs. It also aims to provide support through IJP payments, loss limits, and State Capital Participation.

But it is to note that the guarantee is not open to everyone but is given to few MSME players who meet the criteria.

The grants mentioned above concern the development of MSME. The Indonesian government is providing a space for all the small business owners to come forward and accelerate the digital transformation to tap the potential of the digital economy.

The process to obtain grants

The process of applying for grants is not that difficult. You need to check the eligibility and criteria to receive the grants suitable to your industry. There are many online resources available that allow business owners to discover more information about the subsidies provided by the Indonesian government. Since the grants and schemes focus more on financing and credit facilities, eligibility criteria depend accordingly.

The standard eligibility of grants include

  • The business should be registered in Indonesia
  • The company and industry should fall into the category of MSME to be suitable for grant
  • The company should have a good track record of loan repayments and tax payments
  • The company should be verified by banks and should not come under the denylist

All of the eligibility mentioned above is common for all schemes and policies, though there are variations and modifications attached to different sets of assistance offered by the Indonesian government.

How to apply and register for grants

The grant process encompasses a series of steps to be followed and completed by the SME under the grant they wish to apply for:

Following is the step-by-step process and instructions for the application of grants:

Step 1: Familiarise yourself with the grant cycle and determine your eligibility for the grant opportunity.

Step 2: Search for the specific grant you will apply for

Step 3: After familiarising, prepare the list of reporting requirements to comply with the granting norms. It includes the following

  • Business Registration Certificate (individuals, business, company, cooperative, or entity)
  • Full details of people associated with the business
  • Grant request summary
  • Property Reports
  • Federal Financial Report
  • Audit Reports
  • Other documents related to eligibility

Step 4: Fill in the form and apply for a suitable grant.

Step 5: Complete the registration process, submit and wait for the update by the government.

And you are done!

How can Deskera help Small Businesses?

As a small business owner or a startup, you need to take care of thousands of things. In the above sections, we realized that so many essential factors could make a significant change in your business, such as barcoding, well-managed inventory, financial aid to manage your business efficiently, use of new technology, and proper marketing tools and strategy.

Of course, the Government of Indonesia has been involved in all the above initiatives so that you, as a small business, can rise and shine in Indonesia along with the global platform.

Small businesses are the backbone of every economy, and the irony is you don't hear about them often. But at Deskera, small businesses are the center of everything.

We at Deskera have always been committed to helping SMEs realize their dreams. Since its inception, Deskera has had a singular mission- To transform how SMEs run their business. We want them to grow and exceed expectations by using the best possible technology and tools.

Deskera All In one

And that is why we have designed Deskera-all-in-one - a cloud-based software suite consisting of Books, CRM, and People modules.

This intuitive and hardworking software takes some load off the back of small businesses and startups by optimizing their accounting, operations, and process workflows. Deskera is an all-in-one cloud-based accounting software that helps small businesses run their business efficiently anytime, anywhere, on any device.

Deskera all-in-one does all the below-mentioned tasks and much more for your business.

Deskera all-in-one helps small businesses in managing their general ledger efficiently. Whether its Assets, Liabilities, Equity, Revenue, or Expense, keep your worries behind.

It helps you track every business transaction across your organization.

Since Deskera automates most of the processes, all business transactions automatically populate the journal entry record. It also allows you to create recurring journal entries to save more time.

Deskera's inventory management software enables you to stay on top of your stock levels at all times and fulfill your customer orders with confidence.

The software updates your stocks in real-time and allows you to view the stock availability in each warehouse in seconds. Thus, helping you make informed decisions to optimize your inventory and reduce costs significantly.

With Pick-Pack-Ship, you can efficiently pick products from the warehouse, pack them in the carton, and promptly ship them out to customers.

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Key Takeaways

There is no doubt that startups and MSMEs form the backbone of the business landscape and head towards a healthy and dynamic startup ecosystem. They are considered the critical force behind the Indonesian economic rebound and aim to develop a healthy and upswing digital force connection with the global market.

Following are the key takeaways of the article:

  • Indonesia is regarded as the hub of small businesses.
  • With the help of grants, the government provides funding for businesses and institutions that helps to stimulate the economy.
  • The Indonesian government issued a policy for the development of MSME under the MSME Development program.
  • The Indonesian Government has offered 11 programs as grants for MSME development and growth.
  • The process to obtain grants is easy based on fulfilling the eligibility criteria and the grant you wish to apply for
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