SMEs' Owners Perception of the Impact of Multiple Borrowing on Enterprise Performance

This study assesses the perceptions of Small and Medium Enterprises (SMEs) owners on the impact of multiple borrowing on small business performance and identifies reasons for multiple loans. Data were collected, using questionnaires, from 102 SMEs owners’ selected through theoretical sampling. Analysis of this data was accomplished by using descriptive statistics and Pearson Chi-Square Test of Independence indicates that the major reason for multiple loans was business expansion. Further, entrepreneurs perceive multiple loans as having a significant influence on both the financial performance of their businesses and on their personal lives, especially among those who used the additional loans properly and invested in their existing opportunities. These findings underscore the need for information sharing among Microfinance Institutions (MFIs), the introduction of flexible financial micro services, and financial education for microfinance clients. They also indicate a need for new research on the analysis on the management quality of entrepreneurs on business affairs, particularly on financial matters of SMEs (e.g. working capital management, debt policy and capital structure), and marketing strategies.