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Factors Affecting SME’s Access to Finance from Commercial Banks in Kenya: A Case of Nairobi County

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dc.contributor.author Mumin, Abdifatah Adan
dc.date.accessioned 2019-02-07T08:33:16Z
dc.date.available 2019-02-07T08:33:16Z
dc.date.issued 2018
dc.identifier.uri http://erepo.usiu.ac.ke/11732/4317
dc.description A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) en_US
dc.description.abstract The purpose of this study was to investigate factors affecting SME’s access to finance from commercial banks in Kenya. The study was guided by the following research questions; to what extent does an SME’s profile affect its access to credit, what is the effect of financial performance on SME’s access to credit? How do collateral requirements affect SME’s access to credit? The study used a descriptive research design. Descriptive research was used because it enabled a researcher to determine relationship between variables. The target population for this study was 126 Smes in Nairobi. Primary data was used to collect data. Questionnaires was consisted of closed ended questions. Data collected was then be coded, entered screened and cleaned using Statistical Package for Social Sciences (SPSS) and presented using percentages, means, standard deviations and frequencies. Correlation analysis was done to determine relationship between independents and dependent variables. ANOVA was also be done to compare means between variables. The information was displayed by use of tables, graphs and pie charts. The study revealed that age of owner/manager affects access to finance and women are frequently discouraged to apply for bank credit. The findings also indicated that level of education affects SME’s access to finance. Majority also revealed they have knowledge and skills to run the business. To investigate effects of collateral on access to credit. The finding revealed that banks require collateral before issuing a loan. It was also established that a majority have been denied loan due to lack of collateral The last objective sought to investigate how financial performance affected access to credit. The study established that lack of finance, and management skills affects performance. It was also revealed that respondents have not undergone training to help them run the business. The study concluded that SME’s Profile affected access to credit and similarly, before getting access to the loans age of owner/manager influence access to finance. Despite the changes in the SME profile, as far a access to bank credit is concerned, women are still marginalized. The findings revealed that commercial banks require collateral before issuing a loan to small and medium enterprises. SMEs have failed secure due to lack of collateral. The data given by loan applicants also plays a part in influencing loan. It is not certain that SMEs keep good accounting records, however proprietors admit to issuing accurate financial information to the bank before applying for a loan. SMEs have been able to access adequate information from the bank regarding loan and the repayment depend on the type and size of loan. Lack of finance and management skills can be a hinderance to business performance. In addition, lack of affects performance. Use of advanced technology can be applied to increase performance. There is a lack of ample training to help them entreprenures in the running of the business. The study recommended that banks should customize the policies to cater for loan access by SMEs and to ensure that age of owner/manager does not impede the access to finance. SMES ought to strive as much as possible to attain assets that can be used as collateral in the course of business. The enterprises also need to hounour any debts owed in order to improve their access to finance. At the same time, the firms need to ensure that they issue accurate financial information to the bank before applying for a loan in order to minimize cases of information assymetry. Management need to ensure they have the necessary skills for effective organization performance. There is also a need for the enterprises to advanced technology in order to gain competitive advantage. The managers should be proactive in seeking training opportunities. Based on the findings in the present study, a comparative study ought to be carried out to examine factors influencing credit access among SMEs in Nairobi County. Further research on both large and small enterprises in Kenya in order to analyze the existing discrepancies between the two and therefore bridge the financing gaps that exist. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject SME’s Access en_US
dc.subject Finance en_US
dc.subject Commercial Banks en_US
dc.subject Kenya en_US
dc.subject Nairobi County en_US
dc.title Factors Affecting SME’s Access to Finance from Commercial Banks in Kenya: A Case of Nairobi County en_US
dc.type Thesis en_US


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