Challenges in Accessing Loan for Small And Medium Enterprises: A Case of Songea Municipality”

Joseph, Opiyo (2019) Challenges in Accessing Loan for Small And Medium Enterprises: A Case of Songea Municipality”. Masters thesis, The Open University of Tanzania.

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Abstract

This work is an attempt to determine challenges in accessing loan for small and medium enterprises sampled in Songea Municipal from three randomly selected wards. Specifically, it aimed at assessing SME identifying established requirement in accessing loan, examining awareness of requirements established in accessing loan and finally identify alternative strategies applied. The motive of this paper is that SME differ significantly in term of their financial decision and behavior hence there is a need to determine challenges on the various financing sources of SME as the access to finance is of crucial important for ongoing and sustainable growth and profitability of small and medium enterprises. The study employed quantitative method and instrument for Data collection was questionnaires and documentary reviews. The study reveal that, awareness of requirements is almost high and that all requirements in accessing loan were restrict to ensure community members getting quality and affordable services in loan provision. And meeting of banks requirements, use of micro finance, availability and awareness of alternative in getting loan were increased. Also collaterals which is expressed in terms of immovable asserts is found to be the most important requirement in accessing loans. In the study it is revealed that, when collaterals is limited to immovable asset it encourages them to look for alternatives sources of loans. Therefore, there is a need for more improvement in loan policy and there should be variation in terms of collaterals, in order to expand opportunity for owners of SME to access loan. Because collaterals which is limited on movable asserts is not supportive to provision of loans. Key words: Collaterals, characters, small and medium enterprises

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