Credit Financing And Small Business Performance Within The Agona East District, Ghana

Abstract

This study delved into the effect of credit financing options on the performance of small businesses in the Agona East District. The study discussed financial constraint theory, the concept of credit financing and firm performance as part of the theoretical and conceptual reviews. This dissertation utilised the positivism research paradigm and the quantitative research approach. The study was analysed using descriptive and inferential statistics to examine the relationship between credit financing options and firm performance. In all, 130 managers of small businesses in the Agona East District were included in the study, and the research employed a questionnaire to elicit the required data for the study. The findings demonstrated that the small businesses in the Agona East District of Ghana have varying levels of access to credit financing options, including loans, lines of credit, credit cards, and mortgages. This finding indicates that creditworthiness, as reflected in factors like strong credit scores, collateral availability, and personal credit history, significantly influences small businesses' ability to access credit. Lastly, the findings revealed a positive relationship between credit financing options and firm performance. Based on the results, it was recommended that, managers of small businesses within Agona East District must improve financial literacy programs. In addition financial institutions and credit bureaus should collaborate to establish and maintain robust credit reporting systems. Lastly, small business associations, chambers of commerce, and financial institutions should collaborate to provide education and training on credit management.