An evaluation of the main factor affecting credit repayment in small and medium enterprises: a case of Nairobi County
The main objective of the study was to identify factors hindering SMEs from committed and consistent credit repayments by focusing on SMES in Nairobi County. The specific objectives were to: identify conditions put by banks in offering loans to SMEs; assess whether or not SMEs are able to meet loan conditions put by banks; and establish the impact of loan conditions put by banks on growth and sustainability of SMEs. The study adopted a survey design method in determining the factors that affect SMEs in credit repayment. Its target population comprised SMEs operating within Nairobi County and sampled 100 SMEs within Nairobi County. The study found that independent variable (Character, Capacity, Conditions, Security, Common Sense and Contribution) explains 63.3 percent change of credit repayment. It found that most people have an Account with the Sacco’s with the main reasons for borrowing the loans from these institutions ranging from seeking start- up capital for the businesses, purchasing inventory, business expansion and strengthening of the financial base of the business. It found that the main reason for failure of credit repayment is due to loans given out without any form of security to clients. It recommended that that small and medium enterprises should have a structure where funds are well projected over the period of repayment and portion money for such repayments.