Digital Empowerment of MSMEs: Implications of Digital Loans on Business Sustainability Through Selective Credit Schemes

Digitalization in the financial sector has significantly transformed how banking institutions provide services to Micro, Small, and Medium Enterprises (MSMEs). One of the key innovations is the development of digital loans aimed at accelerating access to capital and promoting business sustainability among MSMEs.This study examines how the selective growth credit distribution program mediated the development of the digital loan model for digital financing and the MSMEs' business sustainability model at Bank BNI in Garut Regency. The rapid growth of digital loans offers MSMEs entrepreneurs’ additional capital, which may accelerate firm growth, but the consequences for business sustainability require more study. This quantitative survey study examines MSMEs that employed BNI's Flexi digital loan under the chosen growth credit distribution scheme. Structural Equation Modelling (SEM) and LISREL software will be used to evaluate the path model linking digital loan use, selective growth credit distribution programs, and MSMEs business sustainability. This study determined the moderating effects of selective growth credit distribution variables (R2=0.715), digital loan resilience (R2=0.731), MSME credit performance (R2=0.625), and server-based product development competency (R2=0.546) as significant factors influencing the business sustainability of MSMEs using Flexi Application at Bank BNI, Garut Regency.