An Investigation Into The Impact Of Microfinance Loans On Perfomance Of Small Businesses: A Case Study Of Merusouth District

ABSTRACT

Access to financial services by self-employed persons in small business enterprises is one of the limiting factors that inhibit growth and development of these small businesses. The problem of accessibility is created by lending institutions through their lending policies. This is displayed in the form of prescribed minimum loan amounts, complicated application procedures and restricting credit for specific purposes. For small business enterprises, reliable access to short-term credit and small amounts of credit is more valuable and appropriate in credit programmes aimed at such enterprises. The funds to buy goods and operate are inadequate because of the high interest rates that are charged on loans by the money lenders, thus small businesses are unable to borrow as they wish and if they do, they are unable to pay the loans thus creating more problems for the business enterprise. Hence, there is a ~ to look for better ways to provide financial services to these small businesses whose collateral base is limited. In this study, microfinance loan (microcredit) is seen as a way to facilitate economic activities through creation of a financial market for small businesses. Provision of financial services to the small businesses will enable them to start economic ( activities, creation of goods and services and growth of these businesses. Microfinance will help bridge the gap created between small businesses limited collateral base and provision of financial services by the mainstream commercial banks. The objective of this study was to derive the correlation between provision of microfinance loans to small businesses and their performance in relation to their sales so as to establish the relationship between women empowerment and microfinance loans. The researcher used both primary and secondary data for this study. Primary data will be collected using a questionnaire. The questionnaire was administered by the researcher and if necessary use research assistants. Both open-ended and closedended questions will be used. Secondary data were sought from the available library search and other documented sources kept by microfinance institutions. Descriptive and inferential statistics were used. Descriptive statistics was used to summarize the basic features of the data in the study,whereas the inferential statistics· were used to infer the sample results to the population. Descriptive statistics such as frequency distributions, percentages, means, ranges, variations and measures of central tendency were used. Data were analysed using Statistical Package for Social Sciences (SPSS).