DEBT FINANCING AND ITS EFFECT ON THE GROWTH OF SMALL AND MEDIUM-SIZED ENTERPRISES IN BAMENDA CITY, CAMEROON

ABSTRACT The aim of this paper is to examine the effects of debt financing on the growth of Small and MediumSized Enterprises (SMEs) in Bamenda, Cameroon. A sample of 100 managers/owners of SMEs was selected for the study, and data was collected using a questionnaire. The data was analyzed using a binary logistic regression technique. The results show that SMEs in Bamenda rely heavily on trade credit and loans from family members to promote growth. Trade credit, in particular, is preferred by many enterprises due to its accessibility and the flexibility of the payment period, leading to a significant positive impact on financial performance. Both trade credit and loans from family members exhibit a positive relationship with SME growth. However, the study found a negative effect of microfinance loans and leasing/equipment loans on SME growth. The study suggests that financial institutions should emphasize training enterprises to better prepare them for utilizing long-term loan services, which could enhance their growth opportunities.

1 29 Jun, 2024

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