| dc.description.abstract | Small businesses are the engines for economic development both in developed as well as
developing countries. Most of the existing studies on debt financing have focused on large
scale firms using data from macro level while little attention has been paid to Small and
Medium Enterprises at micro level (data from firm level). As such this study sought to
investigate the effects of debt financing on the financial performance of small scale
enterprises in Eldoret Town over the period 2010- 2012 using data from the firm level. This
research was guided by the following objectives; to assess the effects of trade credit on
financial performance of SMEs, to determine the effects of short-term loans on financial
performance and to examine the effects of long-term loan on financial performance of SMEs.
This study employed descriptive and explanatory research designs. The data was collected
from a sample size of 50 SMEs, with audited financial statements for a period of three
consecutive years. This research project employed purposive sampling methodology with use
of quantitative secondary data acquired from audited firms in Eldoret Town. The data was
analyzed using descriptive statics and regression analysis. This study found that trade credit
positively influenced financial performance of SMEs, long term and short term debt ratios
negatively affected financial performance of SMEs. The study recommends SMEs capacity
building of areas of business management (including financial record keeping), formation of
cooperative societies by SMEs where there will be a kind of risk pooling when applying for
bank loans | en_US |
