FINANCING SMALL AND MEDIUM SIZE BUSINESSES: EXPERIENCES FROM KWAEBIBIREM RURAL BANK LIMITED, ASUOM, GHANA

Abstract

The contribution of Rural Banks towards the development of Ghana most especially the rural communities have been highly recommendable. Small and Medium Scale Enterprises (SMEs) form the majority of the private sector which is considered as the engine of growth in the Ghanaian economy. Rural banks are therefore expected to focus attention on the provision of quality banking services to the people in their catchment area including the SMEs. It is as a result of this that this study seeks to examine the contribution of Rural Banks to the development of SMEs, taking cognizance of the role and contribution of Kwaebibirem Rural Bank Ltd. The sources of data for the study were both primary and secondary. The primary data was collected by the use of structured questionnaires and interview guides which were designed and administered to SME customers and staff of Kwaebibirem Rural Bank Ltd respectively. The secondary data was collected from text books, journals, research papers and other intellectual works. Tables and graphs were used to analyze the data collected from the field. The findings revealed that microfinance loans is very popular among services provided by rural banks to SMEs due to the fact that most SMEs do not have the collateral to access commercial loans from banks. The researcher again revealed that it was very difficult for SMEs to access start-up capital from banks. In addition to the above it again revealed that most of the SMEs have not registered. This is not helping the SMEs to develop, This study therefore recommend among other things that SMEs should also use loan taken from banks for its intend purpose. Rural banks should take insurance cover for loans granted to new SMEs as start-up capital to reduce the effect of loan default in their book and operations and also reduce the risk of granting loans to new SMEs.