Constraints and opportunities to loan accessibility for small and medium enterprises (SMES): a cases study of Kinondoni district

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The university of Dar es Salaam
The potential of small and medium scale enterprises (SMEs) in promoting economic growth and poverty alleviation in both developed and developing countries is widely accepted and documented by both scholars and policy makers. Limited access to credit for these SMEs, especially in developing countries, has been identified as a major bottleneck in realizing this potential. The study had the following specific objectives; First to identify types and source of capital among SMEs, Second to identify factors that hinder SMEs from accessing credit facilities and third to establish measure taken by SMEs to improve their access to credit facilities. Bank credit is one of the major ways of addressing the challenge of inadequate funding that exists in the SME sector. However, studies conducted in Kinondoni shows that SMEs have limited access to bank credit. The research methodology used multiple methods of data collection and analysis which enabled an element of triangulation to be built into the study design. Data was collected from both the supply-side (bank loan officers) and the demand-side (SME borrowers). This extent previous studies which used only firm level data (demand side) to investigate credit rationing among SMEs. The findings suggest that this phenomenon is prevalent and depends on firm and entrepreneur characteristics, relationship characteristics and loan characteristics and supply conditions. Based on the findings, a number of policy implications aiming at reducing credit rationing for the small business sector were derived. From the finding of study were that the most common reasons given by bank for rejection of fund are poor financial statement, poor management, lack of experience and less confident in capacity to repay loans.
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loan, small and medium enterprises, SMES, Kinondoni
Urassa, L.M.(2012). Constraints and opportunities to loan accessibility for small and medium enterprises (SMES): a cases study of Kinondoni district. Masters dissertation, university of Dar es Salaam. Available at (