All over the world public policy is increasingly directed towards the promotion of small-scale industrial units. This is partially because these small-scale enterprises form an important part of any economy, even in most developed economies. Approximately two thirds of the businesses all over the world are small and medium enterprises, which have traditionally been known for their agility of response to the changing environment. In the development dynamics of Indian economy, the small-scale sector, which covers a wide spectrum of industries, occupies a prominent place. It has undoubtedly grown into one of the vital sectors of our economy. The SMEs confronts several problems despite its strategic importance in any industrialization strategy and its immense potential for employment generation. Among these, the problems of finance are the most important and at the same time most acute too.The Government of India in its endeavor to promote, the small-scale sector, established Andhra Pradesh State Financial Corporation (APSFC) in 1956 with the main objective of extending financial assistance.