Inhibiting Factors Towards Rural Access to Credit Among Small and Medium Enterprises: An Empirical Perspective
9 Pages Posted: 20 Jan 2019
Date Written: January 10, 2019
This study has discussed the key inhibiting factors towards rural access to credit among small and medium enterprises. This study relied on secondary data which was reviewed and summarized using the desktop approach. Initially, the study identified 58 journal articles which however after conducting a tentative scrutiny, 32 journals were selected using random sampling method and whose discussion and scrutiny gave rise to this research article. Many SMEs were found to experience many challenges ranging from low innovative power, inadequate management training and experience, inability to adapt to technological changes, inadequate education and skills, poor infrastructure, poor communication to lack of credit facilities. The study has established that the age of the small and medium enterprise, size of the small and medium enterprise, location of the small and medium enterprise; collateral and the quality of audited financial statements form the main factors inhibiting rural access to credit among small and medium enterprises. The study recommends that that SMEs embrace preparation of quality audited financial statements to act as evidence of their history and ability to repay debt capital as it is usually the requirement of the credit institutions to avail the same. The study also recommends to policy makers on the need to waive the tough and punitive credit requirements such as age of the SME, SME size, SME location and collateral with a bid of increasing more credit access to rural SMEs.
Keywords: Rural SMEs, SME Age, SME Size, SME Location, Audited Financial Statements
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