An assessment of factors determining loan repayment performance of SMEs in Gwarzo Local Government – a review

Abstract

The main objective of this study is to assess the factors that determines loan repayment performance of Small and Medium Enterprises (SMEs) in Gwarzo L.G.A of Kano state-Nigeria as SMEs are important sector in all economies, be it developed or developing, therefore, their performances affects economic development of any nation. However, there are so many credit facilities for SMEs in Nigeria which are meant to promote their activities. Most of these credits are granted without collateral, as such so many SMEs find it difficult to repay the loan on stipulated time which has effect on repayment performance. This study therefore, reviewed existing literature on the relationship between loan sizes, loan tenure, and interest rate, borrowers` attitude of money and loan repayment among SMEs in Nigeria. Based on the literature reviewed the study concludes that loan size, loan tenure, interest rate and borrower`s attitude of money have significant relationship with loan repayment among SMEs in Gwarzo LGA.. The study recommends that financial institutions should consider, loan size, loan tenure, Interest rate and borrower`s attitudes when giving loan to SMEs.