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 →
41
The Relationship Between Computer Skills And Tax Compliance Among Small Business Taxpayers In Kampala
Kabaka Ashraf, Irumba Alex
Computer Skills Tax Compliance Small Business Taxpayers Digital Literacy
42
The Relationship Between Domestic Violence and Students’ Academic Performance in Secondary Schools in Kasaana Subcounty Sheema District
Ainamani Dallen
domestic violence academic performance physical abuse psychological abuse
43
The Relationship Between Effective School Management and Academic Excellence in Selected Private Secondary Schools in Kasaana Sub-County Sheema District
Ainamani Dallen
effective school management academic excellence resource allocation leadership styles
44
TikTok’s Algorithmic Influence on News Dissemination: A Local Perspective in Uganda
Naswiru Sekamate, Salim Kiyingi
; TikTok Algorithm filter bubbles news dissemination