AN APPRAISAL OF COMMERCIAL BANKS FINANCING OF SMALL & MEDIUM SCALE ENTERPRISES

ABSTRACT

The research aimed to evaluate how commercial banks support small and medium-sized enterprises (SMEs) financially. Money deposit bank were chosen for assessment due to their significant presence in the economy and their role as the primary source of funding for SMEs. The research's objective was to provide recommendations based on its findings to help money deposit bank enhance their support for SMEs. The research hypotheses sought to determine whether the availability of collateral security is negatively related to commercial banks' lending to SMEs, whether the loan procedures and requirements of banks negatively impact SMEs' access to loans, and whether awareness and information negatively affect SMEs' access to bank loans. This research employed a survey methodology and collected data from five banks and twenty small-scale businesses. The empirical findings indicate that money deposit bank do provide some financial support to SMEs, but there is room for improvement. SMEs can take steps to overcome obstacles to accessing credit from money deposit banks. The research also revealed that money deposit bank are often the first choice for small businesses seeking funding, yet many of these businesses lack knowledge about how to secure funds from money deposit banks.’ As a result of this research, it is recommended that money deposit banks play a more active role in financing SMEs, as they are well-positioned compared to other financial institutions to support SMEs. Additionally, extending medium-term loans to SMEs is advised to further enhance their financial stability and growth.