Over the last decade, Islamic financial institutions in Indonesia have developed rapidly despite being relatively new. The Financial Services Authority (O.J.K., 2021) reports that 197 such institutions are operating, not including those under the Ministry of Cooperatives and Small and Medium Enterprises. These Islamic financial institutions are projected as intermediary institutions that can provide convenience for the community in turning the wheels of the economy (Zitouni & Ben Jedidia, 2022). The primary role of financial institutions is as intermediaries that provide services to connect the community who save their funds with the community who will apply for financing. This role can solve the inequality in income distribution among the community ((Rahayu, 2020);(Rohman et al., 2021); (Wulandari & Kassim, 2016)).

Based on data from September 2022, there were 26.36 million impoverished individuals in Indonesia, indicating that economic inequality is a severe issue (Statistik, 2022). Most of the poor population is in Java, with 13.94 million people (Statistik, 2022), especially in East Java, which still has many poor people. Hence, the efforts to establish Islamic microfinance institutions in the community are aimed at helping the lower classes improve their standard of living. Islamic Microfinance Institutions (IMFIs) have the same leading role as intermediary institutions. IMFIs focus their financing on small communities, both social (non-profit) such as zakat, infaq, alms or distribution and financing using the profit loss sharing system ((As-Salafiyah & Ratna Kartikawati, 2022); (Taufiq, 2020)). IMFIs in Indonesia usually consist of Sharia Cooperatives (Koperasi Syariah) and Baitul Maal wa Tamwil (BMT).

The legal framework for licensing Islamic Microfinance Institutions (IMFIs) in Indonesia is defined by several regulations: the Financial Services Authority Regulation Number 12/PJOK.05/2014 on Business Licensing and Institutions of Microfinance Institutions; the Minister of Cooperatives and Small and Medium Enterprises Regulation Number 11 of 2018 on Licensing for Savings, Loans, and Cooperative Loan Businesses; the Minister of Cooperatives and Small and Medium Enterprises Regulation Number 11/PER/M.KUKM/XII/2017 on Sharia Savings, Loans, and Financing Business Activities by Cooperatives; and the Minister of Cooperatives and Small and Medium Enterprises Regulation Number 16/Per/M.KUKM/IX/2015. According to this legal framework, IMFIs are defined as entities implementing Sharia-based Savings, Loans, and Financing Business Activities by Cooperatives, which must also be overseen by the Sharia Supervisory Board (Taufiq, 2020).

IMFIs Indonesia is identical to Sharia cooperatives and BMT. Therefore, it is usually established on the initiative of individuals or groups to help micro and medium enterprises as a strategy for eradicating regional poverty, especially in rural areas and traditional markets with operational and managerial systems based on Sharia principles (Rohman et al., 2021). The presence of these IMFIs provides solutions to micro-entrepreneurs who have many obstacles in accessing credit schemes or financing from banks. It is meant to provide welfare to micro-entrepreneurs in the presence of this Sharia financial institution (Loke et al., 2020). There are 8.71 million micro and medium enterprises (K.E.M.E.N.K.O.P.U.K.M.R.I., 2022), and Java Island dominates this sector. East Java in this sector ranks third after West Java and Central Java, with an achievement of 1.15 million units (Databoks, 2023).

The number of micro-entrepreneur units served by microfinance institutions, particularly cooperatives, in East Java totals 22,845 (Statistik, 2022). In Lamongan Regency alone, there are 1,140 cooperative institutions (K.E.M.E.N.K.O.M.U.K.M.R.I., 2023). One notable financial institution in Lamongan is Baitul Tamwil Muhammadiyah (BTM) Mulia Babat, which is a cooperative. According to (Elsafi et al., 2020), BTM, a cooperative affiliated with the Muhammadiyah Islamic organization, has implemented risk management standards that differ from other cooperatives. This makes BTM a compelling subject for the study of Sharia cooperatives. Additionally, "BTM" reputation as one of Muhammadiyah's charitable enterprises in the economic and financial sectors further adds to its interest as a case study. Based on the researcher's field review, there is no doubt that BTM is the right choice for the Muslim community, particularly the residents of Lamongan. In the Lamongan area, there is a BTM known as BTM Mulia Babat, which is an ideal option for the people of Lamongan. As of the 2021 period, the total assets of BTM Mulia Babat reached IDR 26,104,939,842.20 (BABAT, 2021). According to the researcher's field investigation results, BTM Mulia Babat offers capital loans and financing facilities for small and medium enterprises (SMEs).

Previous studies found that Islamic microfinance services can increase the income of poor households ((Ginanjar & Kassim, 2020); (Hamdan et al., 2012)), and business control is needed to increase SMEs' income (Ahmad et al., 2020) (Mawardi et al., 2022), so that it can improve the welfare of SMEs ((Loke et al., 2020); (Rahayu, 2020); (Rokhman & Abduh, 2020)). Therefore, this study aims to determine the direct impact of the effectiveness of Islamic microfinance services and business assistance programs, particularly for financing products, on improving the welfare of SME actors. Additionally, it seeks to examine the indirect impact of the effectiveness of Islamic microfinance services, with the presence of business assistance programs, particularly for financing products, on enhancing the welfare of SME actors in Lamongan, focusing on BTM Mulia as the object of study. Since IMFIs provide various types of micro-enterprise capital financing services and business assistance programs, the novelty of this study lies in identifying the effectiveness of Islamic microfinance institutions, combined with business assistance programs, in improving the welfare of small and medium entrepreneurs (SMEs). While previous studies only measured the effectiveness of microfinance institutions on household income welfare ((Al-Mamun & Mazumder, 2015); (Al-Shami et al., 2016); (Ali et al., 2017); (Elsafi et al., 2020); (Loke et al., 2020); (Ülev et al., 2022)). The implication of this study is to present evidence on the impact of Islamic microfinance institutions on the welfare of micro and medium entrepreneurs, which can encourage more Islamic microfinance programs to offer feasible Islamic microfinance services as an alternative to increasing SMEs in the regions.

Islamic Microfinance

Islamic microfinance institutions (IMFIs) are in the same form as microfinance institutions (MFIs)/ micro-credit/ micro-savings. The difference is that IMFIs, in practice, use Sharia principles, whereas products, contracts, and operations use Sharia principles. IMFIs serve financing needs and launch financing systems for all micro sectors. In Islamic economic practices, banking and microfinance institutions must avoid elements of MAGHRIB (maysir, gharar, riba) ((As-Salafiyah & Ratna Kartikawati, 2022)).

In Indonesia, IMFIs have two characteristics: bank IMFIs and non-bank IMFIs. Bank IMFIs are still based on Islamic banking in general. Still, there are also differences in the Islamic banking law, BI, and OJK regulations regarding these differences, while non-bank IMFIs have enough legal and operational umbrellas. The system uses the same Sharia principles. However, the products and management differ slightly from the banking industry (As-Salafiyah & Ratna Kartikawati, 2022). Islamic MFIs can be an alternative to increase financial inclusion because IMFIs are an alternative platform to integrate commercial and social objectives to increase financial inclusion. This increase in financial inclusion can be successful if Islamic MIFs have factors that facilitate the community, such as affordability, accessibility, feasibility, and availability, and are adequate for the community, especially the lower middle class (Maulana & Umam, 2018).

As an intermediary institution, IMFIs also provide financing products where IMFIs financing products contain higher risks than debt-based products in conventional microfinance. Therefore, financiers such as IMFIs usually require SMEs to have time and effort in developing strategies to manage the potential financial risks of this financing (Rokhman & Abduh, 2020). This situation is expected to impact the performance of SMEs and, of course, provide them with satisfaction with Islamic microfinance institutions. According to Ashraf (2010) there would be an increase in risk, and it would have an impact on loan payback if the internal rate of return of the company owned by the consumers were not able to match the total cost of the financing. A case when the internal rate of return's harsh requirement results in a high loan repayment, will impact the clients' psychological well-being, particularly their contentment with the IMFI they patronize. This study refers to providing satisfaction in terms of low costs, minimal risk, and low installment payments to customers.

To understand the importance and potential of Islamic microfinance, one needs to have a clear perspective on the operation of Islamic microfinance financial products in various countries, including Indonesia. With that, we clearly see the differences between Islamic and conventional microfinance. The basic premise of Islamic microfinance operations lies in the absence of interest in its financing practices. This is a significant difference from conventional modes of finance, where the interest rate determines the balance between demand and supply. In conventional, interest has a vital role to play in the survival of conventional microfinance institutions. On the other hand, Islamic microfinance has eliminated the use of interest in their operations and intermediary mechanisms (Uddin & Barai, 2016). Therefore, Islamic microfinance is proposed to be an effective method for increasing community income, especially with the proposed business financing program, which can increase long-term poor household income ((Ginanjar & Kassim, 2020); (Hamdan et al., 2012)). Hence, the following hypotheses are proposed:

H1. Islamic MFI services have a significant positive impact on increasing the income of SMEs.

Business Assistance

The business assistance program for business financing customers is essential and highly beneficial for Islamic microfinance institutions. This program is sometimes referred to as business control. This business control is highly helpful for improving the effectiveness of funding and attempts to lessen the misappropriation of funds by SMEs for other purposes. The benefit of Islamic finance, particularly Murabahah and Ijarah financing, is that it can alleviate the misuse of capital for other purposes because SMEs that receive capital financing typically do so from IMFIs in the form of business capital goods rather than funds (Hadisumarto et al., 2010).

Usually, direct visits to the business can be used to conduct frequent progress checks on the business as part of this business control or business support program. According to (Hadisumarto et al., 2010), business help in the context of mudharabah funding can be provided through direct visits as well as periodic reviews of business data. In this business assistance, a careful evaluation of the financing project provided by IMFIs is also needed by means of continuous profit-and-loss sharing, which may minimize the occurrence of risky cases in business (Chapra, 1985). Cross-checking among Islamic microfinance financing customers can also be done. Hence, in each area, IMFIs are highly recommended to group participants (so they can get to know each other, exchange information, communicate, and work together). It is useful for facilitating the business control process or monitoring process (Hadisumarto et al., 2010). According to (Ibrahim & RuziahGhazali, 2014), business assistance to financing customers can also increase the effectiveness of IMFI financing and can support their welfare. Hence, the following hypotheses are proposed:

H2. Business assistance has a significant positive impact on increasing the income of SMEs.

SMEs and welfare

According to (Friedlander, 1980) welfare is a system that is administered in an orderly manner through social services and institutions with the goal of assisting people and groups in achieving a healthy and satisfactory standard of living as well as personal and social relationships that offer opportunities for skill development so that people can adjust their welfare to suit their needs (Laksmi & Arjawa, 2023). Welfare can indicate that the individual or group has reached a limit that can provide them with the opportunity to develop abilities so that they can meet their needs. In order to provide a comprehensive view, Islamic law indicators are used to measure the idea of welfare in Islam. Al-Syatibi separates Maqashid Syariah into two groups, which are used as one of the welfare criteria ((Kusuma & Ryandono, 2016); (Mawardi et al., 2022); (Widiastuti et al., 2021)). 1) Sharia objectives, including dharuriyat, haajiyat, and tahsiniyat; 2) Humanitarian objectives (Rahman et al., 2017). According to (Fadhilah et al., 2020); (Rahman et al., 2017), Imam Al-Ghazali divided these factors into five categories that are crucial to understanding: the protection of religion, life, wealth, intelligence, offspring, and property. Islamic welfare is centred on providing the greatest good to individuals both in this life and the next. These considerations serve as the foundation for the five components that this study uses as metrics to determine Islamic welfare or well-being.

Micro, Small, and Medium-Sized Enterprises (MSMEs) were defined by Law No. 20 of 2008 as profitable businesses owned by people and individual business entities that satisfy specific requirements. SMEs have an important role in the surrounding community and have a positive impact. The existence of MSMEs can open up employment opportunities for the surrounding community so that they can meet their needs (Arifin et al., 2021). Based on the findings of (Fianto et al., 2018), it is emphasized that Islamic microfinance in Indonesia has an important role in people's income. Islamic microfinance can provide financial assistance to the poor to help them develop and improve SMEs (Gebru & Paul, 2011). It is hoped that the assets of customer micro-businesses can grow gradually using financial assistance, thus increasing their income-generating capacity and improving family welfare (Rokhman & Abduh, 2020). Research conducted by (Gina & Effendi, 2015) shows that financing from Islamic microfinance institutions has a positive effect on income, and income affects the welfare of SMEs.(Aristina & Widiastuti, 2020), in their research, stated that financing provided by BMT plays a role in improving the welfare of members who are SMEs. Hence, the following hypotheses are proposed:

H3. Increased income for SMEs has a significant positive impact on their welfare.

H4. The indirect effect of Islamic MFI services has a significant positive impact on SMEs' welfare through increasing their income.

H5. The indirect effect of business assistance has a significant positive impact on SMEs' welfare through increasing their income.

This research uses a quantitative approach to measure the statistics of the effect of Islamic microfinance (Islamic MIF) on the level of SMEs welfare using constructs. The analytical method used in this research is PLS-SEM, which follows (Ghozali, 2014) and (Hair et al., 2019). Several researchers have conducted research on microfinance's impact in previous studies ((Al-Mamun & Mazumder, 2015); (Loke et al., 2020); (Nawaz et al., 2021); (Santoso et al., 2020)). PLS-SEM is a flexible and credible statistical tool and has benefits in projecting research theory and as a statistical tool for complex multivariate models (Hair et al., 2019).

Models with several constructs can be estimated using the PLS-SEM analysis method, which can also be used to discover developing correlations between variables ((Sinkovics et al., 2016); (Hair et al., 2019)). This approach is a thorough multivariate analysis tool that has a number of benefits, such as the capacity to examine intricate associations (Hair et al., 2014). It can only look at a tiny sample size and doesn't really normalise the data. Moreover, variables can be simultaneously analysed to ascertain the fundamental structure of the entire collection. Like the others, this also yields results that are valid, understandable, and free of additional analysis, such as outlier detection (Hair et al., 2014). The PLS-SEM approach is a statistical tool that is more potent, adaptable, and superior for forecasting and evaluating a hypothesis, as numerous earlier studies have also demonstrated (Henseler et al., 2015). This statistical method can be applied multiple times to the Islamic microfinance topic, depending on the research topic ((Ginanjar & Kassim, 2020); (Mohd Thas Thaker et al., 2022); (Nawaz et al., 2021); (Purwanto et al., 2022); (Wibowo et al., 2020)).

The type of data used in this study is primary data. This data is based on the results of field research through structured questionnaires (Malhotra, 2009). The collection of data samples in this study used a purposive sampling technique, which was identical to the calculation using the Slovin formula with a level of 5%. The population of this study was the number of BTM Mulia Babat business financing customers for two years, which amounted to 200 customers (Purwanti, 2024). It was obtained from the Slovin Formula of 20 respondents. Therefore, this study used data from 52 respondents, where analyzing data using the PLS-SEM method, more than 30 data were needed (Hair et al., 2011). The sample data using the PLS-SEM method to analyze, a conceptual framework is created as follows, see Figure 1:

The variables discussed in this study can be seen in Figure 1. there are two exogenous variables, namely Islamic MIF services and business assistance BTM Mulia, then the SMEs welfare variable as endogenous variables. To find the relationship between Islamic MIF services and the business assistance BTM Mulia on SMEs welfare, especially those included in the business development program, for a clearer and more concrete picture, this research adds intervening variables, namely increased income SMEs BTM Mulia customers. The increase income SMEs variable is included because the samples in this study are the SMEs BTM Mulia customers. It would give very stimulating pictures and proper correlations, as shown in Figure 1.

The characteristics of the respondents were differentiated based on age, last education, marital status, family members, and type of business, which obtained the following results:

After describing the respondents' data, PLS-SEM tests are carried out. The PLS-SEM data processing results must pass multiple tests to achieve the best outcomes. Meaningful model measurements may only be obtained for each variable with multiple indicators if a multicollinearity test is passed using the collinearity statistics of the Variance Inflation Factor (VIF) value. According to (Hair et al., 2010); (Memon et al., 2017), all indicators in this data set match the criteria, with the VIF value ranging from 1,772 to 6,193, which is significantly less than 10,000. Next, a validity and reliability test is conducted, which includes discriminant and convergent validity. When the construction indicators are in line to help develop the conceptual meaning of the latent variable, convergent validity—a test used to assess the consistency of the indicators of each variable—is attained (Hair, J. F., Ringle, G. T. M., & Sarstedt, 2014). Compare the results of the factor loading, Cronbach's Alpha, Composite Reliability, and Average Variance Extracted (AVE) while testing this. Factor loading and latent variables of correlation are assessed using discriminant validity. Therefore, in order to obtain the desired findings in terms of validity, convergent and discriminant validity tests must be employed, with the goal of verifying the validity of each factor indicator used in the study as well as the content of the research model (Hair et al., 2014). Factor loading revealed low values for a number of indicators; seven indications—X2.5, Y.1, Y.12, Y.16, Y.2, Y.7, and Y.13—are eliminated since, in accordance with (, 2021), the recommended loading is > 0.70. The factor loading and VIF table for the data processing outcomes are shown as follows:

A result of more than 5% for the AVE indicates good construct validity. According to Cronbach's Alpha and Composite Reliability values, the reliability test is conducted in the interim. A construct is deemed dependable in this instance if its composite reliability value is 0.7 and its Cronbach's Alpha value is more than 0.6. Cronbach's Alpha estimates a variable's least reliable level, whereas composite reliability gauges a variable's true dependability. Accordingly, the composite reliability value typically has a higher significance than the Cronbach's Alpha value (Abdillah & Jogiyanto, 2016) (Sekaran & Bougie, 2013). According to (Hair et al., 2012), discriminant validity describes how different a construct is from another. The Fornell-Lacker, cross-loading, and Heterotrait-Monotrait ratio (HTMT) criteria were used in this study by (Hair et al., 2014) to measure discriminant validity efficiently. According to (Fornell et al., 1981), all latent variables meet discriminant validity if the AVE squared value, which is displayed in the data processing findings of this research model, is higher than the correlation value of the latent variables. It is also strengthened by the HTMT results, where no values are close to 1 (Ab Hamid et al., 2017). So, the results of discriminant validity in this research model are valid. The results of construct validity and reliability are shown in the following table:

Bootstrapping result estimations and t-statistic significance values are also used in the path coefficient analysis. When all measurement items have a t-statistic value greater than 1.96 and a p-value less than 0.05 at a significance threshold of 5%, each hypothesis item is considered significant. According to (Ghozali, 2008) and (Hair et al., 2017), the original sample, also known as the parameter coefficient, shows the direction of influence. (Ghozali, 2008) and (Hair et al., 2017) evaluate the original sample by taking into account its effects, both positive and negative, as well as the impact of the independent variable on the dependent variable. Using partial least squares structural equation modelling for data processing, the following outcomes were obtained:

Effect of Islamic MIF services on increase income SME’s

Islamic MIFs offer a variety of financing products, which are opportunities to increase the income of the poorest to free them from poverty (Kireti & Sakwa, 2014). Therefore, the positive impact of the Islamic microfinance program has been seen in the financing products enjoyed by people with various income levels, and this has happened in various countries (Loke et al., 2020). Either is Islamic microfinance in Indonesia, precisely in the Lamongan area, namely BTM Mulia Babat, which has several financing products to help with financial problems for all levels of society, especially those with low incomes.

As evidenced by the analysis results in Table 3, H1 presents the following values: t-statistic 9.612> 1.96, p-value = 0.000, and the original sample value = 0.655. These results indicate that Islamic MIF services have a significant positive relationship to the increase in income of SME customers; this aligns with several findings (Al-Mamun & Mazumder, 2015); (Al-Shami et al., 2016); (Elsafi et al., 2020); (Loke et al., 2020); (Uddin & Barai, 2016). Islamic MIFs in several Islamic countries provide opportunities for people with low and medium incomes to improve their welfare. Islamic MIFs have savings and financing products that are suitable for lower-middle-class people. From these products, this study found that financing products at Islamic MIFs, especially BTM Mulia Babat, have a socio-economic impact on small and medium-sized entrepreneurs. The financing product mechanism at BTM Mulia Babat is based on Sharia transaction contracts. Where the financing products offered by BTM Mulia Babat are Mudharabah, Murabahah, Ijarah or Multijasa, Hiwalah, and Umrah or Hajj financing (Arif, 2023).

Based on the respondents' answers, the research shows that they are satisfied with the services provided by BTM Mulia Babat, especially in its financing products. On average, respondents in this study stated that BTM Mulia Babat's financing products helped them in developing their businesses. Financing for business development has been proven to have a positive impact on increasing the business income of BTM Mulia Babat financing customers, and this is also reinforced by evidence of increased respondent income before and after receiving business financing from BTM Mulia Babat. The comparison of respondents' income before and after receiving financing is quite significant. They experienced an increase in business income after receiving financing. In terms of services, BTM Mulia Babat provides convenience to its customers when applying for financing, which was conveyed directly by the manager of BTM Mulia (Purwanti, 2024). Despite providing convenience in applying for financing to customers, they still analyze prospective financing customers using 5C (character, capacity, capital, collateral, and condition) as a form of risk mitigation from bad financing (Purwanti, 2024).

Business assistance program to increase income SME’s

BTM Mulia Babat has its own way of mitigating credit risk or bad financing; it provides assistance or visits to customers who have applied for financing at BTM Mulia Babat, especially customers who apply for financing for business capital. The importance of business assistance in increasing the effectiveness of business financing for customers has been highlighted in previous studies ((Hadisumarto et al., 2010); (Hamdan et al., 2012); (Harahap et al., 2023); (Maulidia & Nur, 2022); (Suharti, 2018)). The existence of this business assistance program ensures that this business-based financing is not misused and avoids lousy financing. This program is also often referred to as business control, and it is beneficial for increasing the effectiveness of financing (Hadisumarto et al., 2010). This program can also reduce the deviation of the use of business capital so that it is not used or purchased for other things outside of business needs.

The results of this study indicate that the business assistance program has a significant positive effect on increasing SMEs' income, as evidenced by the H2 t-statistic value of 8.127> 1.96 with a significance of 0.000, followed by the original sample value of 0.774. This finding aligns with several previous studies in the Islamic microfinance field ((Hadisumarto et al., 2010); (Hamdan et al., 2012); (Harahap et al., 2023); (Mawardi et al., 2022)). This business control or business assistance program can help financing customers to improve their businesses so that they can increase their income.

Increase income SME’s to SME’s welfare

The increasing income of SME’s plays a crucial role in enhancing the SME’s welfare. SME’s welfare in the context of this study is measured by the Maqashid Syariah parameters so that the assessment of its welfare is comprehensive for life in the dunya and the akhirah. As summarized in Table 3 showed that H3 is supported by this findings. The increasing income of SMEs has a significant positive impact on SMEs' welfare proven by t-statistic 9.753 > 1.96 and it is statistically significant at 0.000. The result of the original sample is 0.663. This result implies that higher the number of SMEs income the higher the SMEs welfare. It support the finding by Prihadini & Asrori (2017) that customer business development has a positive and significant effect on the level of customer welfare.

The additional capital from BTM Mulia is a catalyst to boost the SME business after receiving microfinance. Financing the business has led to increasing business profits, business scale, and assets. Also, the increase in revenue supports the SME to achieve household basic requirements of consumption even raise the SME's quality of life. In this study, the concept of achieving SME welfare is defined by meeting the five basic needs in Islam based on Maqashid Syariah. The fundamentals are material and spiritual to safeguard religion (deen), soul (nafs), intellect (aql), descent (nasl), and property (maal) (Dahlan, 2003). Because of this, Islamic microfinance demonstrates a positive impact on welfare by the financing indicator.

Indirect Effects Islamic MIFs and Business Assistance Programme to increase income SMEs to SMEs welfare

Furthermore, this study also established the indirect effect of SME income on the influence of Islamic MFI services on SMEs' welfare. However, an increase in SME income does not establish a relationship between Islamic MIFs' service and SMEs' welfare. The empirical statistic shows that the t-statistic for H4 is 0.740 < 1.96. Therefore, H4 is not statistically significant (Table 3), and the amount or quality of Islamic MIFs' service does have no indirect effect on increasing the income of SMEs to SMEs' welfare.

In addition, the increase in SME income also does not mediate business assistance programs to SME’s welfare. As seen in Table 3, H5 is not statistically significant. The t-statistic for H5 is lower than t-table (0.995<1.96). It implies that the increase in SME income is not able to mediate the influence of business assistance programs on SMEs' welfare, so large and small amounts of business assistance programs do not affect SME's welfare. However, the business assistance program is non-formal technical assistance designed by BTM Mulia to monitor SME business performance. The model is one-on-one discussions to support SME business operations so that there are no problems with instalments or even increasing the scale of the business.

Using BTM Mulia Babat as a case study of Islamic microfinance, this study shows that its 0 increase in income of BTM Mulia financing customers has an impact on their welfare. However, when viewed directly, this does not have an impact on the welfare of SMEs. Therefore, the indirect findings of this study are the responsibility of Islamic MIFs in resolving this. In the future, it is hoped that Islamic MIF services will have a direct impact on the welfare of business financing customers. In empirical implications, the findings of this study highlight the importance of business control from Islamic MIFs as business financing providers to support their business. Thus, Islamic MIFs that have business financing products are required to monitor and evaluate regularly in order to minimize the risk of bad financing. The scope of this study is limited to one Islamic microfinance, namely, only taking a case study at BTM Mulia Lamongan. Although the respondents in this study were only 52, this is because BTM Mulia's business financing customers are still fewer than non-business financing customers. However, the results of managing respondent data in this study are indirectly in line with the information from the source, namely the BTM Mulia Manager. Nevertheless, this study is considered capable of representing the management of business financing and business control assistance in Islamic microfinance in East Java, especially in the Lamongan area.

This research was supported by the Higher Education Research and Development Council (DIKTILITBANG) of PP Muhammadiyah. The author would like to greatful the Research and Community Service Institute of Universitas Muhammadiyah Lamongan, and DIKTILITBANG PP Muhammadiyah for the financial support in writing this research. The author would also like to be grateful to the representatives of Baitul Tamwil Muhammadiyah Mulia Babat Lamongan for their participation in completing this research.