| dc.description.abstract | The purpose of this study was to establish the effect of credit facilities on the financial performance of SMEs in Nansana town council. The specific objectives; 1) to establish the relationship between collateral and the financial performance of SMEs, 2) to establish the relationship between interest rate and the financial performance of SMEs, 3) to determine the relationship between loan repayment period and the financial performance of SMEs and 4) to determine the relationship between access to credit and the financial performance of SMEs in Nansana Town Council. Quantitative data was collected from 54 SME owners using questionnaires. Study findings showed that; for the relationship between collateral and the financial performance of SMEs, collateral required by the bank being favorable, presence of collateralized assets and the collateral security required to get the loan limiting the firm to borrow from the commercial banks were found to affect the performance of SMEs while the firm having sufficient collateral security to get credit from the bank, the firm being able to acquire bigger loan amounts, and the firm having reliable security guaranteed to access the loan do not significantly affect the performance of SMEs; for Relationship between interest rate and the financial performance of SMEs, the firm affording the interest rates charged by commercial banks and the interest rates offered being short repayment periods were found to significantly affect the performance of SMEs while the interest rates paid remaining fixed throughout the repayment period was found not to significantly affect the performance of SMEs; relationship between loan repayment period and the financial performance of SMEs, results concluded that most loans obtained by the firm having to be paid within one year and the firms loan repayment period varying according to the loan amount were found to significantly affect the performance of SMEs while the loan repayment period given to firms being convenient and the firm getting incentives from banks after paying back the loan in terms of increase in loan amount were found not to significantly affect the performance of SMEs and for the relationship between access to credit and the financial performance of SMEs, the firm easily getting credit facilities and the firm often getting the loan size it requires were found to significantly affect the performance of SMEs. The study concluded that some credit terms affect the performance of SMEs in Nansana and others do not. | |
