access to finance and performance of small and medium enterprises a case study of selected smes in wandegeya, jiadefu supermarket, prime supermarket

Description

The study was carried out to determine the effect of access to finance on the performance of small and medium enterprises in Uganda. In particular, the study sought to explore the experiences of small and medium enterprises borrowers in access financial services. The main objectives of this study included; Establishing the source of finance for SMEs Establishing the factors that influence the performance of SMEs Establishing the relationship between access to finance and performance of SMEs. The researcher used both descriptive and analytical research designs. The research designs were appropriate because data was easily analyzed using frequency counts and percentages derived from the responses obtained in the questionnaires. From the study, it is clear that there is great demand for financial services by SMEs, On the other hand, it s also evident that the supply for financial services is rampant from both formal and informal financial institutions. Even with all this demand and supply, SMEs continue to face myriad of challenges in trying to access financial assistance from these financial institutions. collateral requirements has been cited as a major cause of these financing problems coupled with misuse of funds meant to assist SMEs grow into sustainable ventures. Lack of knowhow by small business owners about financing policies of these institutions have made SMEs incur losses in the repayment process since they end up making less than they borrowed hence some of them are forced to close down. In case they continue operating, they are incapable of acquiring a subsequent loan. . From the study undertaken, the researcher found out there is a weak relationship between access to finance and performance of SMEs having a correlation of 0.386 Based on the results, the study recommends that there is need for commercial banks to promote transparency by regularly publishing bank charges and interest rates in the print media, as is done in Kenya. This is likely to increase competition and thus ultimate reduction in interest rates. Serious awareness programs have also been advocated to spread the knowhow on the policies of fund application. Introduction of small loaning programs for SMEs has also been advocated.