Borrowed capital and performance of small and medium scale enterprises: A case of Kisumu municipality
Onyango, A. J.
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Small and Medium Scale Enterprises (SMEs) seem to be the engine of economic growth and development in the developing world. Though this is the case, SMEs in Kenya function with limited access to finance, among other things. This study sought to investigate the extent to which small and medium scale businesses use borrowed capital to enhance their performance in Kisumu. The study investigated the relationship between borrowed capital and performance in the business enterprises. This study would be helpful in explaining the level of performance of SMEs in Kenya. The study used both primary and secondary data. Business owners and managers were consulted as the source of the primary data. For secondary data, the study used published literature on the rate of performance of businesses in Kenya and written reports about the small and medium scale business organizations. The study used cluster random sampling to obtain the sample population from the target population. The study was conducted through survey and was concerned with the levels of use of credit financing in small and medium scale business enterprises. The survey research design generally entails the use of sample populations to analyze and discover occurrences of events. This study employed, in data analysis, Simple Descriptive Statistics and Correlation Coefficient. The study found the extent to which SMEs access borrowed capital in Kisumu Municipality to be low. Only 36.1 % of all SMEs in Kisumu Municipality use borrowed capital. This means that despite the availability of a variety of sources of borrowed capital in Kisumu, many SMEs are still not able to access the borrowed capital. The fmdings of this study will be useful in establishing the availability and accessibility to borrowed capital by small and medium scale business organizations.