IMPACT OF CREDIT FACILITIES ON PERFORMANCE OF SMEs IN JALINGO METROPOLIS

Abstract

This study examined the impact of credit facilities on the performance of small and medium enterprises in Jalingo metropolis. The study focuses on assessing how trade credit, bank credit and bank overdrafts affect the financial performance of SMEs. The study hinged on the growth theory in explaining the concepts. The survey design was adopted for the study with the use of the questionnaire instrument issued to 196 SMEs randomly sampled out of 387 registered SMEs with the corporate affairs commission. Cronbach's alpha was used to test the reliability of the instrument. The data was represented using frequency and simple percentages. A robust test was carried out on the data after which multiple regression was conducted to test the impact of the predictors on the dependent variable with the use of SPSS 25. The findings of the study revealed that trade credit has no significant impact on the performance of SMEs in the Jalingo metropolis with a negative (coefficient -.016) and significance of .73. Bank credit showed a positive and significant impact on the financial performance of SMEs in Jalingo with a coefficient of 0.034 and significance of .023. Overdraft has a significant impact on the performance of SMEs in the Jalingo metropolis. It shows a positive coefficient of 0.949 and a significance of .000. The study recommends among others that suppliers of trade credit should visit SMEs by way of monitoring and creating awareness for granting credit and they should ensure that the purpose of trade credit granted is utilized accordingly.