Abstract
This report presents the findings of a research study whose main research question was what the internal characteristics of SMEs in Gauteng are, that influence their access to funding, from the perspective of the demand-side.
The study used a survey design to identify the main internal characteristics of 144 SMEs in Gauteng that were purposively sampled from the database of one consultancy firm. A questionnaire with both closed and open-ended questions was the main data-gathering instrument in the study. The data was analyzed through descriptive and inferential statistics and the statistical package SPSS Version 21.0 was used. With logistic regression, crucial variables in the model were identified and determined the prediction of the approval or decline of SME loan applications. The main findings of the study were that the abilities of SMEs to attract funding were influenced by their main internal characteristics, such as: size of the business; age of the business; type of industry; managerial competencies of the owner/managers; and educational levels of the SME owner/managers. The availability of collateral was a key determinant in the approval or decline of a loan application. Furthermore, the majority of respondents perceived the process of applying for funding as complex. SMEs that were VAT compliant had better chances of funding success. The study concluded that SMEs in Gauteng have certain internal characteristics that relate to the ways in which they operate their businesses and that these characteristics impact on their access to funding.
Thus, the study recommends that SMEs be encouraged to avail themselves for professional advice as this is likely to improve their managerial competencies and assist in the application processes. SMEs are also urged to keep updated and correct financial records to significantly reduce or minimize cash flow constraints through the use of early warning indicators.
M.Com. (Business Management)