African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4188

Full Length Research Paper

Constraints to credit access by new SMEs in South Africa: A supply-side analysis

Olawale Olufunso Fatoki1* and A. Van Aardt Smit2
  1Department of Business Management, Room E19, Economic Sciences Building, University of Fort Hare, South Africa. 2Department of Business Management, Soppie Grounewoudp Building, University of the Free State, Bloemfontein, South Africa.
Email: [email protected]

  •  Accepted: 05 January 2011
  •  Published: 18 February 2011



The primary objective of this study is to investigate empirically the constraints to credit access by new SMEs from commercial banks and trade creditors. For this purpose an initial 52-item questionnaire was developed after a thorough review of the literature on the business environment. Exploratory factor analysis identified nine factors which included four internal and five external factors. The internal factors were labelled as managerial competencies, collateral, networking and business information. The external factors were labelled the macro-economy, the legal environment, ethical perception, crime and corruption. The instrument used was the self-administered questionnaire. The statistical analyses included descriptive statistics, frequencies, factor analysis T-test and Pearson’s correlation. The findings indicated that there are certain factors in the business environment that constrain credit access to new SMEs.


Key words:  New SMEs, commercial banks, trade creditors, business environment.