Financing constraints facing small enterprises in the Pretoria Central business district.
Sehlangu, Nyiko
Sehlangu, Nyiko
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Abstract
Small enterprises (SEs) are not able to grow effectively due to inadequate financial support from both financial institutions and the government of South Africa. Various financial institutions continuously reject loan applications from SEs due to a lack of collateral, lack of financial literacy, poor managerial skills, insufficient own capital, and government regulations. SEs contribute significantly towards employment and economic growth, yet few studies have examined the financing constraints faced by SEs. This study aimed to identify the financing constraints that prevent small enterprises (SEs) from accessing loans through financial institutions, and to provide guidelines and strategies to improving small business loan accessibility. A mixed-methods research approach, which involved qualitative and quantitative methods, was used to draw conclusions from the collected data. Qualitative analysis through Directed Content Analysis (DCA) was used to analyse and interpret textual data, which
was sourced from existing literature, whereas quantitative analysis through descriptive and inferential analyses, utilising data drawn from questionnaires, were used to categorise, organise, analyse, and interpret the collected primary data. The collection and analysis of data were only limited to SEs in the Pretoria CBD, South Africa. The study found that lack of collateral, regulations, and lack of business management skills constrain SEs from accessing finance from financial institutions and government agencies. The study recommends the implementation of a collateral register, the reduction of compliance requirements, credit extension incentives to financial institutions, awareness programmes, and business management training programmes for SEs to improve their access to finance. These recommendations will assist SEs to acquire the required skills, capacity, business, and regulatory compliance. The recommended solutions will reduce barriers associated with access to business loans for SEs, enable SEs to source financing from financial institutions, which will consequently lead to business growth and sustainability.
Description
Submitted in fulfilment of the requirements for the degree, Master of Business Studies in Finance in the Department of Finance and Investment, Faculty of Economics and Finance at the Tshwane University of Technology
Date
2024-07-01
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Tshwane University of Technology
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Keywords
Entrepreneurship, Small enterprises, Financing constraints, Financial institutions, Pretoria CBD