| dc.description.abstract | Importance in the role of the SME in the development process continues to be in the forefront of
policy debates not only in developing countries but also in developed countries. The advantages
claimed for SME are various, including the encouragement of entrepreneurship; the greater
likelihood that SME will utilize labor intensive technologies and thus have an immediate impact
on employment generations; they can usually be established rapidly and put into operation to
produce quick returns; and they may well become a countervailing force against economic power
of large enterprises. More generally the development of SME is seen as accelerating the
achievement of wider socio-economic objectives, including poverty alleviation.
In spite of the generally fast pace by which aces to financial services for SME is being
developed, significant segments of the SME sector do not yet benefit from the expansion and
deepening of outreach. In attempting to gain access to financial services SME continue to face
constraints caused by many factors. Thus this research intended to study the challenges faced by
SME in access to finance. The findings indicated that problems faced by SMEs were insufficient
collateral (71.4%) and Business proposal not acceptable (21.4%). on the same note the study
identified that the most challenging stage of the loan process were; application and appraisal
stage, loan approval stage and the period it took to process the loan. terms of coping mechanism
used to manage challenges faced by SMEs in accessing finance, the study identified the
following; saving and trying to reduce expenses, attending financial seminars, use of merry go
rounds, borrowing from friends at zero interest rates, reducing credit period for the firm’s
creditors, obtaining credit facilities from suppliers, ploughing back profits, offering stock as
security, consulting with other SMEs owners, joining Sacco, using credit cards and overdrafts.
Based on the study findings, it is recommended that the stakeholders within the sector should
endeavor to provide financial information infrastructure, the government and financial
institutions should also provide a good economic environment where SMEs can be able to
borrow at reasonable rates as well as friendly terms. It’s also important to train most of the
entrepreneurs on simple financial management tips, to enable them make informed financial
decision. | en |
