Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Microfinance Credit Conditions and Startup Capital Acquisition of Micro, Small, and Medium Enterprises in Bayelsa State

Nera Ebenezer Mansi PhD, Festus Emeke Ogwu

Abstract

This study examined the relationship between microfinance credit conditions and startup capital acquisition of micro, small, and medium enterprises in Bayelsa State. Specifically, it investigated whether microfinance credit cost and collateral requirements are related to the ability of MSMEs to acquire startup capital. The study adopted a cross-sectional survey design. The population comprised owners and managers of micro, small, and medium enterprises within Yenagoa metropolis who have been operating their businesses for at least ten (10) years and are registered in the SMEDAN registry. A stratified sampling technique was employed to select eighty-eight (88) respondents from key commercial business zones within Yenagoa metropolis. Data were collected through structured questionnaires and analyzed using descriptive statistics and Pearson correlation with the aid of SPSS version 26. The findings revealed a negative but significant relationship between both microfinance credit cost and collateral requirements and startup capital acquisition, indicating that higher credit costs and stringent collateral requirements are associated with reduced startup capital acquisition by MSMEs. The study concluded that affordable microfinance credit and flexible collateral policies are essential for enhancing startup capital acquisition, supporting financial inclusion, and promoting the growth and sustainability of micro, small, and medium enterprises. Based on these findings, the study recommended that microfinance institutions should adopt lower interest rates, minimize administrative fees, and accept alternative forms of collateral such as group guarantees or personal guarantees to improve MSMEs’ access to startup capital.

Keywords

Microfinance credit conditionsmicrofinance credit costcollateral requirementsstartup capital acquisitionfinancial inclusion.

References

Adeola, S., & Musa, T. (2019). The role of startup capital in MSME development: Challenges and prospects. Journal of Small Business and Entrepreneurship, 15(3), 100-115. Adeyemi, F. (2023). Micro-credit programs and financial sustainability in low-income communities. International Journal of Microfinance, 8(3), 45-60. Agbaje, A. (2021). The economics of micro-credit in developing economies. Journal of Finance and Development, 12(3), 44-60. Ajayi, O., & Bello, K. (2018). Accessing startup capital: The experience of MSMEs in emerging markets. International Journal of Business Finance, 12(2), 45-60. Anifowose, O. D., & Onileowo, T. T. (2020). Small business and start-up capital: Grilling the flora and configuration of the financial capital for a viable small business. International Journal of Small Business and Entrepreneurship Research, 8(3), 1-14. Babatunde, A. A. (2024). Examining financing strategies and performance of MSMEs in Ilorin, Kwara State, Nigeria. International Journal of Finance, Insurance and Risk Management, 14(1), 79-94. Bello, A. (2024). Financial inclusion through micro-credit: Opportunities and challenges. Journal of Financial Studies, 19(1), 80-95. Chanda, B. (2024). Evaluating the contribution of financial lending institutions through access to finance, in achieving sustainable growth of micro, small and medium enterprises : a case study of Kasama district, Northern province (Doctoral dissertation, The University of Zambia). Echem, K. A., Aduku, E. B., & Ejiofor, S. E. (2022). Micro, small and medium enterprises financing, employment and national economic welfare in Nigeria. World Journal of Advanced Research and Reviews, 15(2), 369-380. Kiai, R. M., Kiragu, D., & Githinji, C. W. (2019). Effect of collateral requirement on financial performance of agribusiness small and micro enterprises in Nyeri Central Sub County Kenya. Mahmoud, M. A., Umar, U. H., Danlami, M. R., & Ado, M. B. (2024). An analysis of Islamic financing access in Nigeria: Perspectives of MSME owners. International Journal of Islamic and Middle Eastern Finance and Management. Morobe, D. M. (2015). The effect of micro finance loans on the financial performance of small medium enterprises in Nairobi County (Doctoral dissertation, University of Nairobi). Musa, T. (2022). Financial sustainability in micro-credit programs: A balancing act. African Journal of Economic Studies, 9(2), 112-127. Muthama, K., & Warui, F. (2021). Influence of lending terms on loan performance of microfinance institutions in Kisii County (Case Study; Kenya Women Microfinance Bank). International Academic Journal of Economics and Finance, 3 (7), 21, 3(7), 21- 44. Ogunleye, Y. (2023). Financial literacy and the management of startup capital among MSMEs. Journal of Entrepreneurship and Innovation, 16(1), 70-88. Okafor, P. (2022). The impact of startup capital on business longevity: A Nigerian case study. Journal of Entrepreneurship and Innovation, 13(2), 65-78. Okeke, I., Eze, J., & Ojo, L. (2020). Barriers to accessing startup capital among MSMEs in developing economies. African Journal of Finance, 10(1), 32-47. Olowe, K., & Adebayo, M. (2023). Risk management in micro-credit lending: The cost of financial inclusion. Journal of Microfinance and Economic Development, 14(1), 65-80. Omolawal, S. A., & Adeniyi, I. S. (2024). Breaking barriers: Exploring factors shaping access to business start-up capital among female entrepreneurs in Lagos State, Nigeria. African Journal for the Psychological Studies of Social Issues, 27(2), 170-183. Onuoha, P., & Ibrahim, R. (2021). Challenges in acquiring startup capital: The case of micro and small enterprises. International Journal of Development Economics, 9(4), 29-38. Organization for Economic Cooperation and Development. (2017). Enhancing the contributions of SMEs in a global and digitalized economy. Retrieved from https://www.oecd.org/industry/C-MIN-2017-8-EN.pdf Ovedje, O. H. (2024). Adequacy of funding and growth of small and medium enterprises in Nigeria. International Journal of Financial Research and Business Development, 4(7), 215-234. Padipadi, O. (2016). An investigation on the access of start-up capital by small, medium and micro enterprises in Botswana (Doctoral dissertation, University of Botswana). Peter, B., & Olufemi, A. (2023). Overcoming the challenges confronting startups in Nigeria. European Business & Management, 9(2), 32-42. Raimi, L., & Uzodinma, I. (2020). Trends in financing programmes for the development of micro, small and medium enterprises in Nigeria: A qualitative meta- synthesis. In Contemporary developments in entrepreneurial finance: An academic and policy lens on the status-quo, challenges and trends (pp. 81-101). Ramachandran, S., & Chandramohan, B. P. (2023). Problems in availing institutional finance by informal MSMEs in India with special reference to MUDRA Loans and Udyam Registration. The Indian Economic Journal, 5, 255-268. Ssekiziyivu, B., Bananuka, J., Nabeta, I. N., & Tumwebaze, Z. (2018). Borrowers characteristics, credit terms and loan repayment performance among clients of microfinance institutions : Evidence from rural Uganda. Journal of Economics and International Finance, 10(1), 1-10. Subeyr, M., & Muturi, W. (2017). Factors affecting access to credit by microenterprises in Garowe, Puntland. International Journal of Economics, Commerce and Management, 3, 291-311. Tochukwu, I. T., & Onwuchekwa, F. C. (2023). Business start-up: Effect of fiscal policy on sustainability of micro, small and medium enterprises . International Journal of Business and Management Research, 3(2). Toromo, K. (2020). Micro credit access and financial performance of micro, small and medium enterprises in Baringo County, Kenya (Doctoral dissertation, Kenyatta University). Uche, P., & Ekpenyong, S. (2023). The micro-credit challenge: Balancing affordability and sustainability. International Journal of Microfinance Research, 11(2), 25-40. Utama, H. (2025). An analysis of business loans on the payment of micro, small and medium enterprises loans. Jurnal Multidisiplin Sahombu, 5(03), 273-285. Yusuf, R. (2024). Microfinance costs and financial inclusion: A critical analysis. African Financial Review, 15(1), 50-68.

More Articles from WORLD JOURNAL OF ENTREPRENEURIAL DEVELOPMENT STUDIES