Access to finance and its challenge for small business enterprises: in the case of jimma town, Ethiopia

Abstract

Small business enterprises play very significant role in the economy of any country. They provide employment and improve the standard of living of individuals-both the employers and employees. They are a major source of entrepreneurial skills and innovations; the objective of this study was to assess finance and its factor for small business enterprises in the case of Jimma town. This study was intended to be of great importance to individual entrepreneurs, potential investors, lending institutions, the country, and other researchers. The target population was 2393 small business enterprises operating in Jimma town. The study used stratified random sampling to select respondents from the selected strata out of which 331 respondents were selected. Data was gathered using questionnaires. The data collected were subjected to descriptive research design analysis and ordinal logistic regression analysis. Also, was carried out to establish the relationship between independent and dependent variables. It was then presented in tables and graphs. Findings revealed that lack of availability of information on who is offering credit, increasing collateral requirement by the financial institution, lack of customer satisfaction, and lack of a way of internal finance management such as lack of compiling accounting records, using a traditional way of recording transactions, etc. are some of the biggest hurdles that small business enterprise in Jimma town face in access to finance. In addition to this, the problem was comparatively similar in that of internal and external finance. As a result of this, the researcher suggests the problem of internal finance will be solved by the small business enterprise owners by using modernize ways of managing internal finance and increasing their customer satisfaction.