JMGT_V4_N2_RP5 Sree Rama Murthy Y. Journal on Management 2230 – 715X 4 2 68 84 SME, Financing, Oman, MENA (Middle East and Narth Africa) Small and medium enterprises play a very important role in a country like Oman in terms of their potential contribute to employment and growth. However, SMEs in Oman are in their nascent stage and need to be nurtured to contribute in a significant manner to the employment and growth of the country. The basic objective of this paper is to look financing problems faced by small and medium enterprises, as this is seen to be the critical obstacle to growth of SMEs in countries like Oman. Small enterprises are defined as those with 1 to 9 employees and medium enterprises are those with 10 to 99 employees. A framework was developed to examine the financing issues surrounding small and medium enterprises. The framework looks at the interlinkages between SME financing constraints, sources of SME financing, working capital financing problems and service sector SME financial constraints. Analysis leads us to conclude that more than 62% of small and medium enterprises in the MENA region find financing a problem. Majority of the small enterprises reported that a large part of their assets are financed by owners funds (internal financing), while less than 25% of their funding requirements are met by short term bank borrowings, and long term borrowings. Supplier's credit (payables) is a very important source of funding for small enterprises in Oman. The results clearly force us to conclude that small enterprises are not getting enough funding from banks and financial institutions. Internal equity financing and supplier's credit are extremely important sources of financing for service sector firms in Oman. The author concludes that obstacles which need to be looked at by the policy makers for development of SMEs in middle east countries like Oman are lowering interest rates, ensuring that banks and financial institutions give long term loans, reducing the need for collateral requirements and lastly making banks more accessible especially to small borrowers. There appears to be a need for better and easier communication between banks and small enterprises. However we conclude with a very troubling question which emerged in process of data analysis - “Does Oman really need small enterprises ?”. September - November 2009 Copyright © 2009 i-manager publications. All rights reserved. i-manager Publications http://www.imanagerpublications.com/Article.aspx?ArticleId=1063