Effects of Information on Loan Access: A Case of Small and Medium Enterprises in Kenya

The purpose of this study was to evaluate whether in access to information affect small and medium enterprises (SMEs) in accessing loans from commercial banks in Meru County Municipality. The descriptive research design was used. The specific objective of the study was to determine the relationship between access to information and access to bank loan by SMEs. The target population consisted of 599 SMEs registered, licensed and operating within Meru County Municipality. A sample size of 60 SMEs was selected using stratified random sampling. Primary data was collected by use of administered questionnaires that were hand delivered to the respondents of the SMEs owners. Data collected was presented in frequency tables. The Pearson Chi-Square statistics measures the significance of the relationship between the variables while eta statistic measures the degree of the relationship. The SPSS version 21 statistical software was used to analyse the collected data. Pearson Chi –Square statistic was used to test research hypotheses and the significance of relationships between the variables of the study. Access to information was found to influence SMEs loan access from Commercial Banks by SME owners. Recommendations from the study were that the banks should adopt the relationship lending that has succeeded in other countries. The SME owners should be provided with adequate information by the banks and also they should also give the appropriate information to the banks which would enhance trust between the SME owners and the banks eliminating the fear of high business risk. The banks should provide tailor- made products for their different types of customers.