Strategies for Accessing Credit by Small and Medium Enterprises

Abstract

Small and medium enterprise business owners play an important role in the Kenyan economy as they account for approximately 78 percent of total employment and 57 percent of the new jobs created. Despite their significant contribution, SME business owners face enormous challenges as such as access to credit, which affects their businesses. This study adopted a qualitative research paradigm with a multiple case study design to explore the strategies Kenyan SME business owners used to access credit to improve the profitability and growth of their businesses. Semi-structured interviews were used to collect primary data from a sample of four SME owners of businesses located in Kakamega Town, Kenya, who have had access to credit. Company documents were used as supplementary data. All interpretations from the data were subjected to member checking to ensure the reliability of the findings. The research findings revealed that SME business owners face challenges in accessing credit to sustain their businesses because of the higher collateral requirements demanded by banks as a condition for lending. The study recommended that SME owners use their education and professional background, information access and group lending strategies to access credit to improve the profitability and growth of their businesses.

Intensity of the creative economy agency and partnership in empowering micro and small enterprises

“…Meanwhile, firms that have customers in both local and domestic markets are relatively higher in contributing to the increase in value-added of micro and small enterprises. This finding is in line with Burger et al (2015), who stated that increasing production through investment in new technology requires capital, and Ogoi (2017), who explained that increased profitability and business growth require capital. Institutional partnerships contribute negatively to the value-added of micro and small enterprises, while indirect institutional policies (Creative Economy Agency) contribute positively.…”

“…In contrast, micro and small enterprises oriented towards traders and firms require a reduction in difficulties in obtaining skilled labor. This finding supports that reducing difficulties in accessing economic resources will increase production (Burger et al, 2015), improve business profitability and growth (Ogoi, 2017), and increase export capacity (McLean & Charles, 2020). Therefore, policymakers need to immediately formulate tailor-made loans for micro and small enterprises as suggested by the International Labour Organization (ILO, 2019) and follow the example of alternative financing in the OECD (Cusmano & Koreen, 2015).…”

“…In terms of resource access, a key constraint for micro and small enterprises is the capital needed to increase production through investment in new technologies (Burger et al, 2015), to improve business profitability and growth (Ogoi, 2017), and increase export capacity (McLean & Charles, 2020). To narrow the capital gap, OECD countries have developed external financing techniques for small and medium-sized enterprises, including direct debt based on asset-based financing, alternative debt, hybrid instruments, and equity instruments (Cusmano & Koreen, 2015).…”

Vpliv Organizacijske Zmožnosti Mreženja Hitro Rastočega Podjetja Na Zaznano Finančno Uspešnost

“…Predstavljeni rezultati podpirajo pretekle ugotovitve, ki so nakazale na pomemben vpliv mreženja na uspešnost podjetja [8,16]. Mreženje in organizacijska zmožnost mreženja lahko na uspešnost podjetja vplivata tako neposredno, kot tudi posredno, preko dostopnosti do finančnih virov [2,12,21] in dostopnosti do informacij s katerimi podjejte razpolaga [15,18]. Kljub temu, da rezultati podpirajo pretekle ugotovitve, saj smo v članku prikazali pozitiven statistično značilen vpliv organizacijske zmožnosti mreženja na finančno uspešnost, je le-ta vpliv razmeroma šibak.…”

“…Družbene vezi prav tako predstavljajo pomemben element, preko katerih lahko posamezniki ali podjetja dostopajo do informacij, saj bodo le-te določale vrsto, kakovost in obliko informacij, do katerih bodo imeli posamezniki (podjetja) dostop [18]. Dostopne informacije bodo namreč pomembne za izbiro oblike financiranja podjetja, prav tako pa bo njihova nedostopnost vplivala na težje pridobivanje virov financiranja, kar se je pokazalo tudi na primeru raziskave izvedene s strani Ogoi [15]. Omenjeno predstavlja pomembno ugotovitev, saj vemo, da je dostopnost finančnih virov eden izmed ključnih dejavnikov razvoja in rasti malih ter srednje velikih (med njimi tudi hitro rastočih) podjetij [9].…”