The effect of credit financing by micro-financial institutions on the performance of small and medium enterprises (SMEs) in Uganda; case study: Soroti municipal council in Soroti district.

Abstract

This study aimed to establish the effect of Credit Financing on the performance of small and medium Enterprises (SMEs) in Soroti Municipality. The study was guided by two variables that is credit financing with dimensions of credit assessment, risk management, and credit monitoring as the independent variable and performance of SMEs as the dependent variable was dimensions of profitability, sales volume, and market share. A stratified sampling method was used, the researcher used 127 respondents from different SMEs in Soroti Municipality. The study used a case study design and used both qualitative and quantitative approaches, questionnaires were used to gather respondents’ views. The findings showed that credit financing positively affect the performance of SMEs in Soroti Municipality. And the researcher recommended that different small businesses should ensure that they carryout credit assessment, monitoring and risk assessment as they do the borrowing so as overcome challenges related to borrowing by SMEs.