Bank credit policies and credit accessibility by small and medium enterprises

Abstract

This study was mainly carried out due to the difficulty faced by SMEs in accessing credit from commercial banks to sustain business growth. The purpose of the study was to assess and measure how small and medium scale enterprises access finance and support from the lending institutions. The study was guided by the following objectives; To examine the relationship between bank credit policies and access to commercial loans; To identify the main obstacles to SMEs accessing finance from financial services; To investigate the experiences of SME borrowers in making decisions to seek credit from banks; To examine the effect of bank credit policies on SME access to commercial loan finance. The study was based on a survey design. Primary data was collected using self administered questionnaires issued to respondents who were owners/managers of the business. A sample size of 80 respondents was selected from a population of 100 SMEs using simple random sampling method. Data was analyzed using SPSS version 16. Correlation analysis was carried out to establish the association among the variables. The results indicated a significant positive association among the variables of bank credit policies and access to credit of SMEs. The study recommends that SMEs, there is need by the owners to fulfill the set bank credit policies in order to maintain a good relationship with the commercial banks. In this way, the bank will be able provide credit no matter the amount needed. The government also needs to support the SME sector