An investigation of Factors that Cause SMEs to Default on Loan Repayment

Author(s)	Charles Katongo Lwanga, Sankara Nayagam
Country	Zambia
Abstract	Small and Medium Enterprises (SMEs) have been asserted to be the bases of economies worldwide, including Zambia, playing a major role in economic growth. However, they often struggled with loan repayment, raising the questions why they faltered in fulfilling their financing obligations. This study explored some of the factors contributing to SME loan repayment failures. This research focused on Chipata Business Area, which was currently dominated by SMEs, to uncover the challenges SMEs faced with regard to repaying loans to the financial institutions. Studies show that SMEs in the country, often resorted to informal financial channels due to lack of collateral to access finance from formal institutions. Even when loans were obtained, repayment remained a challenge for most SMEs. Understanding that phenomenon was crucial for future policy considerations to promote economic growth and financial stability in Zambia.
Keywords	Small and Medium Enterprises, Financial Management, Financial literature, Economic impact
Field	Business Administration
Published In	Volume 6, Issue 5, September-October 2024
Published On	2024-09-19
Cite This	An investigation of Factors that Cause SMEs to Default on Loan Repayment - Charles Katongo Lwanga, Sankara Nayagam - IJFMR Volume 6, Issue 5, September-October 2024. DOI 10.36948/ijfmr.2024.v06i05.26652
DOI	https://doi.org/10.36948/ijfmr.2024.v06i05.26652
Short DOI	https://doi.org/g4qmzg

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