Credit Financing and Performance of SMEs in Lira Municipality, Uganda

Abstract

This study sought to examine the role of Credit financing on performance of SMEs in Lira Municipality. A sample of 120 respondents was considered with response rate of 100%. The findings indicated that extending credit to SMEs enables them to access essential resources, increase business diversification and increase productivity levels. The study recommends that Credit institutions should continue providing credit at affordable rates while endeavoring to train their clients on how to keep financial information, which is essential in assessing the borrower’s credit worthiness. SMEs should practice documenting their transactions, including information on personal characteristics, which are essential in assessing the credit worthiness of potential borrowers.

Keywords: Credit Financing, Interest rates, Creditor information, Collateral security, Firm Performance