Indonesia’s MSME Ministry Urges Franchise Businesses to Use KUR Loans

Indonesia’s Ministry of Micro, Small and Medium Enterprises (MSMEs) has encouraged franchise owners and prospective franchisees to use Kredit Usaha Rakyat (KUR), the government-backed business loan scheme, to start or expand their businesses. Bagus Rachman, the ministry’s Deputy for Medium Enterprises, made the call at the Indonesia Franchise & Business Concept (IFBC) event, as reported by MomsMoney on 9 November 2026. His message went beyond securing capital: businesses also need to prepare for sustainable growth.

KUR for Starting and Expanding a Business

Bagus said the government was working to improve access to finance through KUR. He encouraged franchise owners and prospective franchisees to use the scheme to support both new ventures and the expansion of existing businesses.

For the franchise sector, this highlights financing needs at two distinct stages: when prospective franchisees begin trading and when existing owners seek to scale up. Both require business readiness, even if the capital is used differently.

The report did not provide details of loan limits, interest rates, participating banks or franchise-specific eligibility requirements. Prospective borrowers should therefore check the lending terms directly with a participating lender before including KUR in their investment plans.

These checks matter because decisions to open or expand outlets should not rest on the assumption that finance will be available. Business plans need to account for capital requirements, repayment capacity and the obligations involved in the franchise partnership. This is a prudent planning step, not a new KUR requirement announced at the event.

Capital Must Be Matched by Operational Readiness

Bagus stressed that business expansion must go hand in hand with stronger fundamentals. He highlighted standardised operating procedures, consistent product and service quality, professional governance and brand protection.

“Franchising is not merely a partnership model for expanding business networks; it is also a strategic tool for helping MSMEs move to the next level,” Bagus said, as quoted by MomsMoney.

This emphasis puts the call to use financing into context. Additional capital is not being presented as the only requirement for expansion. Consistently applied working systems and professional management are also part of preparing for growth.

For prospective franchisees, this message can inform due diligence before choosing a brand. Alongside assessing the investment required, they should examine how well operating procedures are established and how product and service quality is maintained across the network. Brand owners need to give these matters the same attention before offering further franchise opportunities.

Financing discussions should therefore remain closely linked to operational readiness. Funding needs and the ability to run the business system should be assessed together, rather than treated as separate issues.

Legal Compliance and Business Connections

Alongside operations, Bagus highlighted legal compliance, including meeting the requirements for the Surat Tanda Pendaftaran Waralaba (STPW), Indonesia’s franchise registration certificate. He said attention to compliance was needed to ensure professional relationships and legal certainty between franchise owners and franchisees.

This was not an announcement of changes to STPW rules. The focus was on complying with franchise requirements as businesses prepare for growth. Brand protection was also identified as part of the foundation for a sustainable business.

The ministry is also preparing to develop a cluster-based Holding UMKM programme. It aims to strengthen connections between businesses and build an integrated business ecosystem.

No details were given on how businesses could participate or when the programme would be implemented. Nevertheless, the stated direction shows that business development is being considered not only in terms of funding individual companies, but also through connections between businesses.

Funding Options Depend on Business Maturity

Beyond KUR, Bagus mentioned the capital markets as an alternative for franchise businesses with strong fundamentals that meet the relevant requirements. He pointed to the Indonesia Stock Exchange’s Acceleration Board as one funding route for small and medium-sized companies.

According to Bagus, around 43 small and medium-sized businesses have used the board, raising a total of Rp2 trillion. That figure refers to small and medium-sized businesses generally, not to the number of franchise companies that have secured funding.

Bagus also stressed that a strong domestic market presence should underpin local brands’ international expansion. Product quality, business systems, management capacity and operating standards must be prepared to meet the demands of overseas markets.

Practical step: before applying for finance, franchise owners and prospective franchisees should match their capital needs with their operational readiness, check legal compliance and confirm lending terms directly with the lender.