The Impact Of Credit Facilities On Tanzanian Smes Growth
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As SMEs are leading enterprises globally in contributing to GDP, employment, exports and investments, to name a few, they are mainly using credit facilitates rendered by financial institutions to support their operations. Considering the importance of the nexus between the two economic players in triggering the growth rate of an economy where the former represents product market, while the latter represents money market, this study aims to examine the impact of credit facilities on the growth of SMEs. As such, it treated interest rate, loan limit and loan terms as independent variables, while growth of SMEs was considered as dependent variable. Data was successfully collected using structured questionnaire from SMEs in Dar es salaam region. A total of 200 questionnaires were administered to various SMEs stakeholders but only 121 respondents were analysed using SPSS. Using both descriptive and inferential statistics, the findings revealed that there was a strong positive relationship between interest rates, loan amount, loan terms and growth of SMEs. The findings also revealed that at 95% confidence level, all variables produced statistically significant values, signifying that all of them effect the growth of SMEs. The findings further revealed that strict loan repayment terms, high interest rates as well as small loan amounts are still major challenges in accessing credit facilities despite their contribution towards SMEs growth. Lastly, the study recommends the need for the government to regulate the financial institutions through the credit bureau to enable SMEs stakeholders to access credit with affordable interest rate charged along with reviewing loan requirements criteria or loan repayment terms to improve credit access at large by SMEs.