Factors Influencing Credit Financing Of Small Scale Business Enterprises, In Kisii County, Kenya

Abstract

This study was carried out to determine the factors influencing credit financing of small scale enterprises in Kisii town. The cadre of SSBs understudy was the registered small scale businesses in Kisii town. The purpose of this study was to investigate factors influencing credit financing of small businesses in Kisii town, Kisii County in Kenya. The study addressed the following objectives to determine the extent to which financial status influence credit financing of small business enterprises in Kisii Town, to establish the extent to which size of business influence credit financing of small business enterprises in Kisii Town , to investigate the extent to which collateral measures influence credit financing of small business enterprises in Kisii Town and to ascertain the extent to which management skills influence credit financing of small scale business enterprises in Kisii Town. This study highlights the factors that influence credit financing of small business enterprises in Kisii town and give possible policies and measures on enhancing their growth. The suggestions of policies and measures to enhance the growth of microenterprises may enable the Kisii County to improve its development plan. The growth of the SSBs may boost the employment opportunities thus benefitting the locality and country at large. The literature review identified what other researchers have done in the area of credit financing of small scale enterprises. The study is conceptualized to determine the relationship between the dependent and independent variables. The study employed the descriptive survey research design and employed questionnaire to collect data from160 SSB in Kisii town. The researcher sampled 160 SSB out of the population of 560 SSB using a simple stratified sampling technique. The questionnaires were tested in a selected sample of 20 businesses within Kisii town which were similar to the actual sample which was used in this study. The study employed questionnaires and interview in data collection. The reliability and validity of the research instruments was ascertained before being used in data collection. The study found out that the enterprises had inadequate funds. It was also revealed that the enterprises had stagnated in their financial status due to corruption in the municipality. It was also revealed that the enterprises had inadequate finances due to procedures that are too long to get the funding from financial institutions. The financial status of the enterprises is therefore affected in one way or the other. Therefore, there is need for accessing credit by the small scale business enterprises to boost the businesses.