Effect of accessing bank credit facilities

Credit facilities are defined as contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date. In the past, SMEs, particularly, in developing countries, lacked access to financial products and services. The SME market was perceived by banks as risky and costly to serve. However, with the continuing advancement in information and communications technology, the cost of serving SMEs has fallen and commercial banks now perceive significant opportunities in the SME sector. Despite the opportunities of financial services and products that exist, available studies show that about 44% of Kenyans are financially excluded and do not utilize financial services and products. Research findings in Kenya have also shown that over 50% of small scale entrepreneurs continue to have deteriorating performance with three in every five small scale enterprises failing within months of establishment. The purpose of the study was to find the effect of accessing bank credit facilities in Kibuye market, Kisumu County, Kenya. Cross sectional survey research design was used in this study. The study was carried out in Kibuye market, Kisumu County; Kenya. Target population was 5000 small scale enterprises. A sample size of 356 was determined using simple random sampling technique. Data were collected using structured questionnaire. Validity of instrument was established by a team of experts in the area of the study while reliability of the instrument determined using Cronbach alpha coefficient method. Data were analyzed using descriptive statistics and inferential statistics and presented in statistical tables, bar graphs and pie charts.