ISSN 2736-1721
Global Journal of Business Management ISSN 6731-4538 Vol. 6 (8), pp. 001-012, August, 2012.© International Scholars Journals
Full Length Research Paper
Business environmental influences on the availability of debt to new SMEs in South Africa
Fatoki Olawale1* and A. Van Aardt Smit2
1Department of Business Management, University of Fort Hare, South Africa.
2Department of Business Management, University of the Free State, South Africa.
Accepted 12 June, 2012
Abstract
This study investigates the impact of the business environment (internal and external environment) on the availability of debt from commercial banks to new SMEs. The literature identifies 78 issues. Exploratory factor analysis reduces the issues to nine factors that include both internal and external factors. The internal factors were labeled as managerial competencies, collateral, networking and business information. The external factors were labeled macro- economy, legal, ethics, crime and corruption. Empirical research was conducted to investigate the impact of the nine factors on the availability of debt finance to new SMEs. The instrument used was the self-administered questionnaire. The statistical analyses included factor analysis, item analysis and correlation. The results show that both internal and external factors significantly impact on the availability of debt finance to new SMEs, but internal factors are more important. Understanding the impact of overall business environment rather than focusing only on the internal environment can help new SMEs owners, commercial banks and government identify measures to improve the availability of debt finance.
Key words: New SMEs, internal environment, external environment, debt finance.