Small and medium enterprise business owners play an important role in the Kenyan economy as they account for approximately 78 percent of total employment and 57 percent of the new jobs created. Despite their significant contribution, SME business owners face enormous challenges as such as access to credit, which affects their businesses. This study adopted a qualitative research paradigm with a multiple case study design to explore the strategies Kenyan SME business owners used to access credit to improve the profitability and growth of their businesses. Semi-structured interviews were used to collect primary data from a sample of four SME owners of businesses located in Kakamega Town, Kenya, who have had access to credit. Company documents were used as supplementary data. All interpretations from the data were subjected to member checking to ensure the reliability of the findings. The research findings revealed that SME business owners face challenges in accessing credit to sustain their businesses because of the higher collateral requirements demanded by banks as a condition for lending. The study recommended that SME owners use their education and professional background, information access and group lending strategies to access credit to improve the profitability and growth of their businesses.
Adama, T. Y., and Nadif, M. (2013). The influence of manager’s social capital on SMEs’ performance and access to external resources in Moroccan Textile Industry, International Journal of Management and Administrative Sciences, Vol. 2, 13-23. Retrieved from http://www.researchgate.net/
Adler, P.S., and Kwon, S.W. (2002). Social capital: Prospects for a new concept. The academy of Management Review, Vol. 27, 17-40. doi:10.5465/AMR.2002.5922314
Agyapong, A., and Muntaka, A. S., (2012). Strategic planning and performance of businesses in Ghana: A comparative study of micro, small, and large firms, International Business and Economics Research Journal, Vol. 11, 1261. Retrieved from http://www.cluteinstitute.com
Agyei-Mensah, B.K. (2012). Working capital management practices of small firms in the Ashanti Region of Ghana, International Academic Journal of Academic Research in Business and Social Sciences, Vol. 2, 567-583. doi:10.2139/ssrn.1596734
Anyan, F. (2013). The influence of power shifts in data collection and analysis stages: A focus on qualitative research interview, The Qualitative Report, Vol. 18 (36), 1-9. Retrieved from http://www.nova.edu/ssss/QR/QR18/anyan36.pdf
Atogenzoya, C. A., Nyeadi, J. D., and Atiga, O. (2014). The land for landed property collateral for loan facilities and its impact on small enterprises’ investment drive, International Journal of Academic Research in Business and Social Sciences, Vol. 4, 79-95
Bhatt, P., and Altinay, L. (2013). How social capital is leveraged in social innovations under resource constraints, Management Decision, Vol. 51, 1772-1792. doi:10.1108/MD.01.2013.0041
Bridge, S. (2013), Reflections on the omission of social capital from enterprise education and business start training, Business and Training, Vol. 55, 899-910. doi: 10.1108/FT-06-2013-0080
Bunyasi, G. N., Bwisa, H., and Namusonge, G., (2014). Effects of entrepreneurial finance on growth of small and medium enterprises in Kenya, European Journal of Business and Management, Vol. 6, 113-123. Retrieved from http://www.iiste.org/journals/index.php/RJFA/article/view/12322
Carlos, J., Pinho, M. R. (2013). The role of relational social capital in examining exporter-intermediary relationships, European Business Review, Vol. 25, 553-570. doi:10.1108/EBR-03.2013.0037
Devinaga, R., and Tan, T. M. (2012). Review of Credit Guarantee Corporation of Malaysia (CGCM) initiatives to enhance small and medium enterprises’ performance, International Journal of Business and Management, Vol. 7, 101-111. doi: 105539/ijbm.v7n20p101
Dube, A. P. (2012). A study of group lending in Swaziland: A case of IMBITA Swaziland Womens’ Finance Trust (Master’s thesis). Retrieved from http://scholar.sun.ac.za/handle/100019.1/95611
Gaitho, N. W., (2013). Role of credit reference bureaus on credit access in Kenya: A survey of commercial banks in Kenya, European Scientific Journal, Vol. 9, 301-314. Retrieved from http://www.eujournal.org/index/.php/es/article/vileFile/1055/1089
Gichuki, J. A. W., Njeru, A., and Ondabu, I. T. (2014). Challenges facing micro and small enterprises in accessing credit facilities in Kangemi Harambee Market in Nairobi City County, Kenya, International Journal of Scientific and Research Publications, Vol. 4 (12), 1-25. Retrieved from http://www.ijrp.org/research-paper-12/4/ijrsp-p3614.pdf
Hanifan, L. J. (1916). The rural school community center, Annals of the American Academy of Political and Social Science, Vol. 67, 130-138. Retrieved from http://www,jstor.org/stable/1013498?seq=1page_scan_table_contents
Hanna, P. (2012). Using internet technologies (such as Skype) as a research medium: A research note, Qualitative Research, Vol. 12, 239-242. doi: 10.1177/1468794111426607
Hassan, A. (2014). The challenges in poverty alleviation: Role of Islamic microfinance and social capital, Humanomics, Vol. 30, 76-90. doi:10.1108/11.10.2013.0068
Hassan, I. B., and Mugambi, F. (2013). Determinants of growth for women-owned and operated-enterprises: The case of Garissa, Kenya, International Journal of Business and Commerce, Vol. 2, 45-55. Retrieved from http://ijbe.net.com/2.7/IJBC-13-12801.pdf
Hazzan, O., and Nutov, L. (2014). Teaching and learning qualitative research: Conducting qualitative research, The Qualitative Report, Vol. 19 (24), 1-29. Retrieved from http://nsuworks.nova.edu/tqr/vol19/iss24/3
Houghton, C., Casey, D., Shaw, D., and Murphy, K. (2013). Rigor in qualitative case study research, Nurse Researcher, Vol. 20, 12-17. doi: 10.7748/2013. 03.20.12.326
Jagongo, A. (2012), Venture capital (VC): The all-important MSMEs’ financing strategy under neglect in Kenya, International Journal of Business and Social Science, Vol. 3, 234-340. Retrieved from http:ijbssnet.com/journals/vol_3_NO_21_November_2012/24
Jonsson, S., and Lindbergh, J. (2013). The development of social capital and financing of entrepreneurial firms: From financial bootstrapping to bank funding, Entrepreneurial Theory and Practice, Vol. 37, 661-686. doi:10.1111/j.1540-6520.2011.0048.x
Jaoua, F., and Radouche, T. (2014). The moderating role of leader skills on the relationship between strategic management global performance: An empirical study, International Business Research, Vol. 7, 59-72. doi:10.5539/.ibr.v7np59
Kaczynski, D., Salmona, M., and Smith, T. (2013). Qualitative research in finance, Australian Journal of Management, Vol. 39, 127-135. doi: 10.1177/0312896212469611
Kagwathi, G. S., Kamau, J. N., Njau, M. M., and Kamau, S. M. (2014). Risks faced and mitigation strategies employed by small and medium enterprises in Nairobi, Kenya, IOSR Journal of Business and Management, 16 (4), 1-11. Retrieved from http://www.iosrjournals.org/iosr-jbm/papers/vol16-issue4/version5/A016450111.pdf
Kariuki, C. N. N. (2015). Factors affecting development of strategic plans in SMEs: A case study of clothing shops in Nairobi, Kenya (Doctoral dissertation, United States International University). Retrieved from http://erepo.usiu.ac.ke/handle/123456789/629
Kira, A. R. (2013). Determinants of financing constraints in East African countries’ SMEs, International Journal of Business and Management, Vol. 8, 49-68. doi:10.5539/ijbm.v8n8p49
Kiragu, E. M., and Sakwa, M. (2013). Effect of group lending mechanism enterprise development of rural women in Kenya: A survey of Kenyenya District, Kisii County, Kenya, Interdisciplinary Journal of Contemporary Research in Business, Vol. 4, 556-584. Retrieved from http://journal-archives31.webcom/556-584.pdf
Kisaka, E. S., and Mwewa, N. M. (2014). Effects of micro-credit, micro-savings and training on the growth of small and medium enterprises in Machakos County, Kenya, Research Journal of Finance and Accounting, Vol. 5, 43-49. Retrieved from http://www.iiste.org/journals/index.php/RJFA/article/view.12305
Kontinen, T., and Ojala, A. (2012). Social capital in the international operations of family SMEs, Journal of Small Business and Enterprise Development, 19, 39-55. doi: 10.1108/14626001211196398
Light, H., and Dana, L.P. (2013). Boundaries of social capital in entrepreneurship, Entrepreneurship Theory and Practice, Vol. 37 (3), 1-22. doi:10.1111/.etapp.12016
Lu, H., Feng, S., Trienekens, J. H., and Omta, S. W. F. (2012). Networks strength, transaction-specific investments, interpersonal trust, and relationship satisfaction in Chinese agri-food SMEs, China Agricultural Economic Review, Vol. 4, 363-378. doi: 10.1108/1756137121126374
Makena, P., Kubaison, S., and Njati, C. I. (2014). Challenges facing women entrepreneurs in accessing business finance in Kenya: A case study of Ruiru Township, Kiambu County, Kenya, IOSR Journal of Business and Management, 16, Vol. 83-91. Retrieved from http://iosrjournals.org/iosr-jbm/papers/vol16-issue4/version-3/Mo16438391
Marton, A. (2014). Purposive selection and the quality of qualitative IS research. Paper presented at the Thirty-Fourth International Conference on Information Systems, Milan, Abstract retrieved from http://forknings.basen.deff.dk/share.external?sp=Sec82d5c6=6b6a-424f-b371-a5b346067098&sp=Scbs
Mbugua, J. K., Mbugua, S. N., Wangoi, M., Ogada, J. O., and Kariuki, J. N. (2013). Factors affecting the growth of micro and small enterprises: A case of tailoring and dressing enterprises in Eldoret, International Journal of Business and Science, Vol. 285-293. Retrieved from http://ijbssnet.com/journals/vol_4_NO_5_May_2013/34.pdf
Mitchelmore, S., and Rowley, J. (2013). Growth and planning strategies within-women-led SMEs, Management Decision, Vol. 51, 83-96. doi: 10.1108/00251741311291328
Moyi, E. D. (2013). Credit and employment among small enterprises in Kenya, International Journal of Business and Economics Research, Vol. 2, 69-76. doi:10.11648/j.ijber.20130203.14
Mwangi, I. W., and Ouma, S. A., (2012). Social capital and access to credit in Kenya, American Journal of Social and Management Sciences, Vol. 3, 8-16. Retrieved from http://www.scihub.org/AJSMS/PDF/2012/1/AJSMS-3-1-8-16.pdf
Mwangi, N., Shisia, A., Mwai, L., and Okibo, W. B. (2014). Assessment of micro financial institutions funding on the performance of small and medium enterprises in Murang’a County, Kenya, European Journal of Business and Management, Vol. 6, 33-42. Retrieved from http://iiste.org/journals/index.php/EJBM/article/viewFile/14930/15664
Mwaura, A. T. W., Gathenya, J.W., and Kihoro, J.M. (2015). Influence of entrepreneurial group dynamics on the performance of women owned enterprises in Kenya, International Journal of Academic Research in Business and Social Sciences, Vol. 5, 206-218. doi:10.6007/IJARBSS/v5-i10/1869
Mwobobia, F. M. (2012). The challenges facing small-scale women entrepreneurs: A case study of Kenya, International Journal of Business Administration, Vol. 2, 112-121. doi: 10.5430.ijba.v3n2p112
Nahapiet, J., and Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage, Academy of Management Review, Vol. 23, 242-266. Retrieved from http://staffweb.hkbu.edu.hk.vwschow/lectures/ism3620rp01.pdf
Napoli, F. (2012). The effects of corporate governance processes of strategy change and value creation in small and medium-sized firms: A study of family-owned firms in Italy, International Journal of Management, Vol. 29, 232-260. Retrieved from http://www.questia.com/library/journal/1p3-2762924/01/the -effects-of-corporate-governance-processes-of-strategy
Narteh, B., (2013). SME bank selection and patronage behavior in the Ghanaian banking industry, Management Research Review, Vol. 36, 1061-1080. doi: 10.1108/MRR-06-2012-0147
Naveen, K.K. (2012). Dynamic incentives in microfinance group lending: An empirical analysis of progressive lending mechanism, Sage Open, 1-9. doi: 10.1177/21582244012444280
Nawai, N., and Shariff, M.N.M., (2013). Loan repayment problems in microfinance programs that use individual lending approach: A qualitative analysis, Journal of Transformative Entrepreneurship, Vol. 1 (2), 93-99. doi:10.14239/JTE.2013.01203
Nguyen, N., and Luu, N. (2013). Determinants of financing patterns and access to formal-informal credit: The case of small and medium-sized enterprises in Vietnam, Journal of Management Research, Vol. 5, 240-259. doi:10.5296/jmr.v512.3266
Njeri, E. K. (2014). The effect of credit financing on profitability of small and medium-sized enterprises in Nairobi County, Kenya (Master’s thesis). Retrieved from http://erepository.uonbi.ac.ke/handle/1295/77581
Njeru, A.W., Nyangaresi, W. M., and Waithaka, G.N. (2013). Influence of information availability on the choice of entrepreneurial source of finance, International Journal of Business and Social Service, Vol. 4, 256-261. Retrieved from http://ijbssnet.com/journals/vo_4_No_9_August_2013/25.pdf
Njoroge, L. W., and Wario, G. (2015). The influence of strategic planning on performance of small and medium enterprises (SMEs) in Kenya, The Strategic Journal of Business and Change Management, Vol. 2, 503-515. Retrieved from http://www.strategicjournals.com
Nyamboga, T. O., Nyamweya, B.O., Abdi, A. M., Njeru, F., and Gongera, E. G. (2014). An assessment of financial literacy on loan repayment by small and medium entrepreneurs in Ngara, Nairobi, Kenya, Research Journal of Finance and Accounting, Vol. 5, 181-192. Retrieved from http://www.iiste.org/journals/index.php/RJFA/article/view/13594
Okoth, O. S., Okelo, S., Awiti, A. O., Onyango, M., Ogutu, M., Odera, O. (2013). Effect of the Youth Development Fund on youth enterprises in Kenya, International Journal of Advances in Management and Economics, Vol. 2(1), 111-116. Retrieved from http://www.managementjournal.info
Omar, N. A., Nazri, M. A., and Wel, C. A. C. (2014). Entrepreneurial training of low-income women enterprises in the service sector in Malaysia: Understanding the problems and challenges, Journal of Social and Development Sciences, Vol. 5, 245-257. Retrieved from http://researchgate.net/profile/Nor_Asiah_Omar/publication/270957663-Entrepreneurial_Training_of_low_income_women_micro_enterprises_in_the_service_sec
Ongachi, R. N., and Bwisa, H. M. (2013). Factors influencing growth of women-owned micro and small enterprises: A survey of Kitale Municipality, Kenya, International Journal of Academic Research in Business and Social Sciences, Vol. 3, 182-196. Retrieved from http://hrmars.com/hrmars_papers/Factors_Influencing_Growth_of_Women_Owned_micro_and_small_enterprises.pdf
Ong’injo, F.O. (2014). Analysis of factors affecting accessibility of credit facilities among the small and medium enterprises: A case study of Siaya Town, Kenya, (Bachelor’s dissertation, University of Nairobi). Retrieved from http://erepository.uonbi.ac.ke/11295/72298
Onyango, K. A., and Achieng, M. R., (2013). Financial constraints of small and medium enterprises: A case study of Kisumu County, Kenya, International Journal of Marketing and Technology, Vol. 3, 241-252. Retrieved from http://www.indiajournals.com/ijor.aspx?target=ijor.ijmt&volume=3&issue=7article=016
O’Reilly, M., and Parker, N. (2012). Unsatisfactory saturation: A critical exploration of the notion of saturated sample sizes in qualitative research, Qualitative Research, Vol. 13, 190-197. doi: 10.1177/1468794112446106
Osoro, K., and Muturi, W. (2014). The effects of financial institutions’ intervention on the growth of small enterprises in Kenya: A survey of public transportation services in Kisii County, Kenya, Developing Country Studies, Vol. 4, 57-72. Retrieved from http://iiste.org/journals/index.php/DCS/article/view/17106/17465
Pearson, A. W., Carr, J. C., and Shaw, J.C. (2008). Towards a theory of familiness: A social capital perspective, Entrepreneurship Theory and Practice, Vol. 32, 949-969. doi:10.1111/j.1540-6520.2008.00265.x
Petty, N.J., Thompson, O.P., and Stew, G. (2012). Ready for a paradigm shift? Part 2: Introducing qualitative research methodologies and methods, Manual Therapy, Vol. 17, 378-384. doi:10.1016/j.math.2012.03.004
Poulis, K., Poulis, E., and Plakoyianak, E. (2013). The role of context in case study selection: An international business perspective, International Business Review, Vol. 22, 304-314. doi:10.1016/j.ibusrev.2012.04.003
Prasad, S., Tata, J., and Guo, X. (2012). Sustaining small businesses in the United States in times of recession: Role of supply networks and social capital, Journal of Advances in Management Research, Vol. 9, 8-28. doi: 10.1108/09727981211225626
Rowley, J. (2012), Conducting research interviews, Management Research Reviews, Vol. 35, 260-271. doi: 10.1108/01409170210782990
Sandada, M., Pooe, D., and Dhurup, M. (2014). Strategic planning and its relationship with business performance among small and medium enterprises in South Africa, International Business and Economics Research Journal, Vol. 13, 659-669. Retrieved from http://www.cluteinstitute.com/ojs/index.php/IBER/article/view/8602
Sandhu, N., Hussan, J., and Matlay, H. (2012). Entrepreneurship education and training needs of family businesses operating in the agricultural sector of India, Education and Training, Vol. 54, 727-743. doi: 10.1108/00400911211274855
Sarpong, K. A. M., and Arthur, J. K. (2013). Analysis of data cleansing approaches regarding dirty data: A comparative study, International Journal of Computer Applications, Vol. 76, 14-18. doi: 10.5120/13258-0736
Schulman, M.D., and Anderson, C. (1999). The dark side of the force: A case study of restructuring and social capital, Rural Sociology, Vol. 64, 351-372. doi:10.1111/j.1549-0831.1999.00357
Standa, F.N. (2013), The types of small businesses and communication strategies employed by entrepreneurs in Eldoret Town, Kenya, Journal of Business of Emerging Trends in Economics and Management Sciences, Vol. 4, 243-252. Retrieved from http://reference.sabinet.co.za/sa-epublications_article/sl-jetems_v4-n2-a18
Walker, G., Kogut, B., and Shan, W. (1997). Social capital, structural holes, and the formation of an industry network, Organizational Science, Vol. 8, 109-125. doi:10.1287/8.2.109
Wanambisi, A. N., and Bwisa, H. M. (2013). Effects of microfinance lending on business performance: A survey of micro and small enterprises in Kitale Municipality. Kenya, International Journal of Academic Research in Business and Social Sciences, Vol. 3, 56-67. doi:10.6007/IJARBSS/v3-i7/9
Woolock, M., and Narayan, D. (2000). Social capital: Implications for development theory, research, and policy, World Bank Research Observer, Vol. 15, 225-249. doi:10.1093/wbro/15.2.225
Yesseleva, M. (2013). Professional advice and its possible effect on small and medium-sized enterprises’ access to external debt finance in Australia, Global Business and Management Research: An Internal Journal, Vol. 5, 24-31. Retrieved from http://www.gbmr.ioks.com/pdf/vol.%205%20no.%201/3-Yesseleva%202013.pdf
Yin, K. R. (2014). Case study research design and methods (5th ed.), Thousand Oaks, CA: Sage.
Ogoi, H. J. (2017). Strategies for Accessing Credit by Small and Medium Enterprises. International Journal of Academic Research in Business and Social Sciences, 7(6), 391-408.
Copyright: © 2017 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
