The impact of credit funding and financial performance of small medium enterprises:

Abstract

This study examined the impact of credit funding on financial performance of SMEs in PTC. The study was guided by the following objectives notably: to determine the impact of credit management on performance of small and medium enterprises in PTC, to determine the impact of credit policy on performance of small and medium enterprises in PTC and to determine the impact of interest rate on performance of small and medium enterprises in PTC. The study used a cross sectional research design, and a quantitative approach. Data was collected from a target population of 60 SMEs in PTC with accessible unit of 52 respondents, using simple random and purposive sampling techniques. Data were collected with the aid of closed ended questionnaire and Statistical Packages for Social Sciences was employed for analyzing data from which frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained. The study findings revealed that there is a positive and a significant effect of credit management on financial performance, interest rate on financial performance and also credit policy on financial performance of SMEs in PTC. The study concludes that there is a strong predictive power that the dimensions of credit funding contribute towards enhancing financial performance of SMEs in PTC. Finally, the study recommends that to improve financial performance factors of credit management, interest rate and credit policy should be considered.