Challenges facing small and medium scale enterprises (SMEs) in accessing credit (A Case Study of Kumasi Metropolis)

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AUGUST, 2015
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The primary purpose of this research work was to assess the challenges Small and Medium Scale Enterprises (SMEs) face in accessing credit. The research design for this study was a survey, quantitative and descriptive in nature. The study employed the use of questionnaires which were administered personally on selected days. The sample size for the study was hundred (100) comprising of Small and Medium Scale Enterprises within mainly the Adum and Kejetia areas of the Kumasi metropolis. In this study, accidental sampling technique of the non-probability sampling and random sampling technique of the probability sampling techniques were used to select the sample. The study employed descriptive and quantitative techniques in analyzing the data. Tables, frequencies etc. were used in describing and analyzing the data collected. The researcher used Statistical Package for the Social Sciences (SPSS). Based on the data collected and analyzed it was found that the sources of funds for the Small and Medium Scale Enterprises (SMEs) are many. The study revealed that the sources include Microfinance institutions being the most reliable, followed by Banks, Lenders and Susu operators in that order. The study revealed that all 100 respondents representing 100% said they are required by the MFIs to provide some sort of security before loans are granted. The challenges affect their operations in the area of reduction in profits, increase in operational costs, delays in operation etc. The researcher suggested that there should be collaboration between the SMEs and the microfinance firms where the MFIs will provide a soft loan to these firms to help them increase their operations. Again, the researcher suggests that the MFIs should focus on the nature of the business and the ease of recording cash inflows than the security requirement. This will help those who cannot provide security to also have access to loans to expand their businesses.
A thesis submitted to the department of accounting and finance, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirements for the award of master of business administration,