Financial Management Challenges Facing Small and Medium Enterprises in Accessing Credit Facilities: Case of Uasin Gishu County, Kenya
Abstract
The purpose of this study was to examine financial management challenges facing small and medium enterprises in accessing credid facilities in Uashin Gishu County, Kenya. This study was guided by the following research questions; how can the financial institutions structure debt financing for SME’s? What can the revenue authorities do to help SME’s in filing tax returns? Which way can SME’s improve on their debt collection in order to increase their performance? How can SME’s be able to raise capital in order to enhance their efficiency and effectiveness? This study employed descriptive survey design. A sample of 105 small and medium enterprises was drawn from the target population of 350 SMEs. The study employed the probability sampling with stratified random sampling. Data was collected using questionnaires, document analysis and interviews guide. This study found that majority of the enterprises borrow from financial institutions (75%) while the rest (25%) don’t borrow from the bank because of the difficulties encountered when accessing credit and others prefer using their savings and plough back the profits. This study concluded that lack of capital was the biggest financing challenges which affect the performance of small and medium enterprises. This study recommended that financial institutions should encourage SMEs to keep accurate and up to date accounting records so that they are aware of the financial performance and financial position of their entities, as well as their ability to generate cash.
Keywords: Financial management challenges, SMEs, Accesssing credit
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