Access to Credit for SMEs: A study on Chitwan Based Enterprises
Kapil Deb Subedi,
HOD,
Department of Management
Saptagandaki Multiple Campus, TU
Abstract
Access to credit is crucial for the growth and survival of Small and Medium-sized Enterprises (SMEs). Thus policy makers attempt to pursue financial sector policies to propel financial intermediaries to extend more credit to SMEs. Access to credit still remains a challenge to SMEs especially those in developing economies and continues to dominate discussions both within business circles and policy makers. In Nepal, for instance, a survey by Ferrari et al (2006) entitled to “Access to financial services in Nepal” indicated that lack of adequate access to credit topped factors hampering the growth of small businesses in Nepal.

The general objective of this study is to explore the situation of access to finance of SMEs for their innovation and entrepreneurship. It also examines the firm specific attributes of access to bank credit in Nepal by focusing on SMEs in the Chitwan District. The study employed the quantitative approach to research in which the convenience sampling criteria was employed to select seventy-two small firms from the Bharatpur Municipality of Chitwan district. The major findings for the study indicated that there exist significantly, positive relations between certain attributes of a firm and access to credits. There are also, some firm specific attributes such as industry sector, size, collateral status etc and firm specific performances like sales, receivables turnovers, average collection period etc also impact heavily on SMEs access to credits and financing policies.
Keywords; Access to Credit, SMEs, Credit Constraints, Credit Rationing 1.1 Background of the study Access to credit is important for the growth and development of Small and Medium-sized Enterprises (SMEs).