Essay on Saudi SMEs Finance Access constraints impacts on performance - Essay Prowess

Essay on Saudi SMEs Finance Access constraints impacts on performance

Essay on Saudi SMEs Finance Access constraints impacts on performance


Introduction of the article

The study by Waked examines the barriers and effects of access to funds by SMEs in Saudi on their performance. Precisely, it sought to identify the kinds of finance accessible to SMEs in the country by analysing external and internal sources of finance (Waked, 2016). Moreover, it analysed the association between particular features of managers/owners and their operations, need to capital, as well as the challenges encountered in their attempts in financing from financial institutions. Furthermore, the article highlighted the prevailing monetary services and products offered to SMEs, including loans conditions and policies of Saudi financial institutions in terms of SMEs.

Summary of the Literature review

Previous studies point to the fact that most SME face financial constraints. Therefore, scholars have noted that the key reasons for these constraints are poor business structures, unavailability of collateral, absence of creditworthiness, and deficiency in the financial base (Waked, 2016). Essentially, banks are hesitant to offer credit facilities to small and medium enterprises because of related transaction costs and alleged risk level.

Summary of the Methodology

The researcher collected quantitative data through the questionnaires. In addition, the study sampled 270 SMEs in the country. Moreover, qualitative data was collected through interviews from four private and public funding agencies as well as five banks in Saudi Arabia (Waked, 2016). Subsequently, the researcher analysed data using scientific methods such as correlation tests, t-test, chi-square tests, and descriptive analyses.

Summary of the findings

The study established that there was significant association between business features, managers/owners features and the challenges encountered in an attempt to acquire bank credit and the necessity to secure capital from banks in Saudi Arabia. Some of the key factors that prevent managers from acquiring finance from banks included infeasible business plans, poor monetary performance, unavailability of collateral, inconsistency of projects to Kafalah programme, and inadequate information (Waked, 2016). Furthermore, SMEs in Saudi Arabia encounter a wide range of challenges when seeking for loans which includes high interest rates, high collateral demands, prolonged period to obtain inadequate finance, and puzzling criteria when applying for loans.


Waked, B. (2016). Access to Finance by Saudi SMEs: Constraints and the Impact on their Performance (Doctoral dissertation, Victoria University).