Credit Obtaining Challenges Faced by Micro and Small and Medium Enterprises SMEs


  • Samiuddin Shaikh
  • Aisha Bashir Shah
  • Fawad Ashraf


small and medium enterprises (SMES), financial resources, growth and economic development, high interest rate, poor infrastructure and collateral., small and medium enterprises (SMES), financial resources


Small and medium enterprises (SMEs) are considered as powerful instrument to help in the development of a country and improve the employment and poverty base of the country specifically for the developing countries. But unfortunately there are many constraints which prevent the growth of these sectors. Among many constraints, access to financial resources is the major hindrance. The purpose of this study is to determine the challenges faced by micro, small and medium enterprises in credit obtaining such as absence of collateral, high interest rates and poor infrastructure and also it will identify what are sources of funding available to the SMEs. Data was collected using questionnaires. 28 questionnaires were circulated in Bahawalpur, Pakistan using convenience sampling technique. The major findings of the study are. Among major constraints lack of finance, biggest one is the high interest rate, which erode all the profit of the firms and gave them no advantage of having credit. Second challenge is the absence of collateral makes SMEs not to access the financial institutions like bank. Finally the study recommends some suggestions to improve the development of SMEs by urging the government to regulate the bank policies and making collateral requirements flexible. And to provide awareness to entrepreneurs about ranges of financing options.