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| Does Credit Financing Influence Growth Of Small And Medium Enterprises (Smes) In Municipal Urban Councils Of Africa? : Across- Sectional Survey on Kamuli Municipality Local Government
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Baker Ainebyona Wilcky, Twesigye Nduhura, Shadrack Natamba
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Abstract:
This study majorly focused on the effect of Credit Financing and Performance of SME's in Uganda with Kamuli Municipality as the case study in Kamuli district. The study adopted three specific objectives, to determine the effect of Commercial loans on the performance of SME's, to find out the effect of Trade Credit on Performance of SME's and to ascertain the effect of asset-based financing on Performance of SME's in Uganda . A case study research design was adopted with both qualitative and quantitative approaches. Primary and secondary data was obtained for the study and the quantitative data was coded and analyzed using SPSS. Simple random sampling criterion was used in obtaining using automatically generated numbers from the study population. Study findings revealed that; commercial loans have a relatively strong positive relationship with performance of SME's, Trade credit has a strong positive significant relation with performance of SME's, Asset based financing has a strong positive significant relationship with performance of SME's. Also from the model summaries, study findings revealed that; Commercial loans caused the least (0.364 x 100 = 36.4%) of the changes in Performance of SME's, followed by Trade credit which caused (0.534 x 100 = 53.4%) of the changes in Performance of SME's and thirdly, the strongest being that Asset based financing caused (0.589 x 100 = 58.9%) of the changes in Performance of SME's. Hence basing on the findings, it was concluded that Credit financing has a strong effect on the Performance of SME's with a combined Adjusted R square of (63.7% = 0.637 x 100) which reflected that Credit financing caused more than half of the changes in the performance of SME's. Basing on the findings, the study recommends that with respect to Commercial loans, owners and managers of SME's should do proper prior planning for the money and do periodical reviews to know what to prioritize, in line with trade credit the study recommends that SME's should acquire fast moving goods to boost business expansion so as to be able to acquire even more stock on credit and thirdly on Asset based financing, the study recommended that business owners should bargain for favorable repayment terms like lower and more favorable interest charges on loans using their assets.
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