INFLUENCE OF BUSINESS RISK AND COLLATERAL REQUIREMENTS ON CREDIT ACCESS BY SMALL BUSINESS ENTERPRISES IN BUNGOMA COUNTY, KENYA
Abstract
Little empirical literature on credit access by small business enterprises in Kenya motivated this study to investigate the influence business risk and collateral requirements on credit access by small business enterprises in Bungoma County, Kenya. The study adopted descriptive survey design and targeted 5000 small business enterprise in Bungoma County from where Fishers sampling formula was used to calculate a sample size of 119 respondents who were selected through simple random sampling. Primary data was collected by structured questionnaires. SPSS 24 was used for data analysis. From the values of unstandardized regression coefficients with standard errors in parenthesis, both independent variables were significant predictors of credit access by small business enterprises in Bungoma County, Kenya. (dependent variable). The study concluded that financial lending institutions were also profit making entities thus could not engage some risky business entities like small business enterprises with projected loses and insolvency risks. Secondly, collateral requirements were basic loan recovery measures by financial lending institutions to avoid loan delinquencies from non-performing small businesses. The study recommended that first, financial lending institutions should devise feasible financial literacy programs to perceived risky small business customers whose business risk could just be emanating from financially illiterate small business owners and or managers owners. Secondly, managers of small business enterprises should prudently source for financing facilities from financial lending institutions with convenient and lenient collateral requirements.
Key Words: Business Risk, Collateral Requirements, Credit Access, Small Business Enterprises
CITATION: Nyongesa, N. M., & Miroga, J. (2019). Influence of business risk and collateral requirements on credit access by small business enterprises in Bungoma County, Kenya. The Strategic Journal of Business & Change Management, 6 (2), 363 – 377.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i2.1118
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