Abstract:
Ghana’s Small and Medium-sized Enterprises (SMEs) are faced with challenges
in accessing credit from Rural Banks which tends to have effects on their
performances too. Consequently, this study used the quantitative approach in
examining Rural Bank financing and the performance of Small and Medium sized Enterprises in the Jirapa Municipality. The stratified sampling technique
was used to select 92 SME owners while 23 Sonzele Rural Bank staffs were
equally selected, with all 115 respondents responding to questionnaires. The
study revealed that the lack of access to Rural Bank financing is prevalent on the
part of SMEs in the Jirapa municipal. It was discovered through the study that
the few SMEs who access the loans/credits use them effectively as
working/operating capital; to purchase fixed assets, for research and for
development purposes. This tends to have positive effects such as encouraging
the expansion of businesses, increasing capital, enabling the setting up of other
businesses and an improvement in the overall standards of performance of
SMEs. The study showed that the lack of guarantees or collateral, absence of
positive track records, high risk attached to projects, absence of convincing
business plans and inadequate source of repayment served as the major
challenges on the part of SMEs in their attempt to access finance from the Rural
Bank. Finally, it was recommended that Rural Banks should put in measures
meant to increase and make credit facilities easier and more accessible to SMEs.
It was also recommended that government and private individuals should
establish more Rural Banks in the area to cater for the growing SMEs. The study
recommended that SMEs should improve on their track records, go in for
projects of no/minimal risk and also develop attractive business plans.
