Challenges Facing Small Scale Entrepreneuresin Accessing Loan from Banks at Ngongongare, Meru District, Arusha Region in Tanzania

Abstract

The aim of this study was to assess the challenges facing small scale entrepreneurs in accessing loan from banks at Ngongongare, Meru district, Arusha region in Tanzania. A sample size of 100 respondents was used, whereby 65 respondents filled the questionnaire and returned. Descriptive statistics was used to analyze and tabulate data. The following findings were obtained: Collateral is a challenge to small entrepreneurs in accessing loan from the bank; the cost of transaction was found to be high and interest rate was also found to be high; the availability of accounting information was difficult to be obtained from small entrepreneurs so as to grant credit facilities and also the study revealed that capital for SSE is particularly from other sources like SACCOS. The study concluded that collateral, high interest rates, lack of adequate accounting information were the challenges facing small scale entrepreneurs in accessing loans from banks. The researcher recommended that banks should lower their interest rates and also grant loans on business asset and income as collateral securities. In addition, small scale entrepreneurs should be given some training in form of seminars through trade organizations. The study further recommends future researchers to undertake a comparative study between small scale entrepreneurs and small and medium entrepreneurs