MJAMR

Relationship Between Bank Loans And Growth Of SMEs In Kabale Municipality

Kyakulaga Mohamad, Kabanda Richard


Abstract

The study examined the relationship between bank loans and the growth of Small and Medium Enterprises (SMEs) in Kabale Municipality, Uganda. A cross-sectional survey design was employed, collecting data from 120 SME owners and managers through structured questionnaires. The results revealed a significant positive relationship between bank loan accessibility and SME growth (r = 0.672, p < 0.01). Specifically, 68.3% of SMEs that accessed bank loans reported increased revenues, while 71.7% expanded their operations. However, the study identified significant barriers including high interest rates (mean = 4.21/5), stringent collateral requirements (mean = 4.15/5), and complex application procedures (mean = 3.89/5). The study concluded that while bank loans significantly contributed to SME growth in Kabale Municipality, access remained constrained by prohibitive lending conditions. It was recommended that financial institutions develop tailored loan products with reduced interest rates, flexible collateral requirements, and simplified application processes for SMEs. Additionally, the government should establish credit guarantee schemes to reduce lending risks and encourage banks to extend credit to SMEs.

Keywords

Bank loans SME growth financial access Kabale Municipality credit constraints business
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Kyakulaga Mohamad & Kabanda Richard (2025). Relationship Between Bank Loans And Growth Of SMEs In Kabale Municipality. Metropolitan Journal of Academic Multidisciplinary Research, 4(12). https://journals.miu.ac.ug/pages/article.php?article_id=548

More in This Issue

View full issue →
6
Effect Of Corporate Social Responsibility (CSR) On Organizational Development In Uganda. A Case Of Total Energies Kampala
Najuna Joab, Magala Muhammed
Corporate Social Responsibility organizational development Total Energies stakeholder
7
Effect Of Employee Competence On Performance Of Small And Medium-Sized Electronic Enterprises In Kampala District, Uganda.
Abeine Best, Dr Friday Christopher
Employee competence SME performance electronic enterprises skills development
8
Effect Of Internal Control On The Performance Of Organizations In Centenary Bank Limited Kiboga Branch
Kimala Eddie, Zikusooka Enock
Internal Control Organizational Performance Banking Operations Control Environment
9
Effect Of Internal Controls On The Public Funds Of Nebbi District Local Government
Jawoko Alex, Babirye Shamirah
Internal controls public funds local government accountability
10
Effect Of Reduced Market Risk On The Performance Of Mutima Quality Feeds In Natete Kampala
Kebirungi Margret, John Otim William
market risk business performance livestock feed industry risk mitigation