Factors Affecting Access To Credit Among Young Entrepreneurs: The Case Of Burayu Sub City, Shagar City

Abstract

Youth entrepreneurs are more likely to be constrained by access to finance in starting and growing their businesses. This study is aimed to determine factors that affect credit accessibility among youth entrepreneurs in Burayu Sub-city, Shaggar City. The specific research objective of the study were to assess the current level of access to credit among young entrepreneurs in Burayu sub city and to identify the determinant factor mostly affects access to credit of young entrepreneurs in Burayu sub-city. The study adopted both descriptive and explanatory research design to test the hypothesis of causal relationship between the dependent and independent variables. The study adopted both descriptive and explanatory research design to test the hypothesis of causal relationship between the dependent and independent variables. The population of the study consisted of 3460 young entrepreneurs in the Burayu Sub-city. Taro Yamane’s simplified formula was used to determine the sample size determination. With a 95% confidence interval 359 entrepreneurs in the city was selected out of total population of entrepreneurs. Data was collected from 330 respondents using structured questionnaires. The findings on the extent to which influences of interest rates on access to credit among young entrepreneurs in Burayu sub-city revealed that there exists a positive relationship between interest rates and young entrepreneurs to access credit. The findings on the extent to which influences of credit awareness on credit accessibility among the young entrepreneurs indicated the existence of a significant positive relationship between credit awareness and young entrepreneur’s credit accessibility. The findings on the extent to which influences of level of literacy on credit accessibility among young entrepreneurs in Burayu sub-city revealed that there exists a positive relationship between level of literacy and young entrepreneurs credit accessibility. The findings on relationship between collateral security and credit accessibility among young entrepreneurs revealed the existence of a positive relationship between collateral security and young entrepreneur’s credit accessibility. Finally, the findings of influences of managerial competencies on credit accessibility among young entrepreneurs revealed the existence of a positive relationship between managerial influence and young entrepreneur’s credit accessibility. Interest rates, Credit awareness and collateral security are found significantly affects access to credit among young entrepreneurs. The findings of the study recommend that entrepreneurs have to enough information about credit and compare the interest rate offered by different financial institutions and the government should put mechanisms enhance young entrepreneurs’ business education and training on access to credit