The important role played by the small-medium scale contractors in Indonesia has been flawed by their lack of performance and inefficiency. It demands improvement through innovation processes. Yet, the endeavor has been challenged by the limitation in sources of funding. This study therefore, was set to investigate the significance of the available source of funding to the innovation processes for Indonesian small-medium scale contractors. The result has shown that majority of the respondents were not having difficulties in accessing source of funding. Moreover, the interest rate was the most highlighted by the respondents amongst financial factors which might stimulate the innovation. However, the available source of funding still could not supporting the innovation processes. A solution has been proposed in order to overcome the problems. It is a system which has scanning, monitoring and training processes in one complete mechanism and known as microcredit. All the respondents agreed that the program would boost the industry performance. Yet, there was a major concern shown by the respondents for its contingency and success. The program would also bring a major change to the industry’s structure.