Background: Access to finance is identified as one of the biggest problems faced by Small and Medium-Sized Enterprises (SMEs) in most developing economies. Consequently, access to finance has been identified as a dominant constraint facing the SMEs sector in Lesotho. This paper established the factors of access to finance that influence the competitive growth of the SME sector in Lesotho. The factors addressed include financial information access, bank and business support services, the structure of banks and collateral requirements by the financial sector.
Findings: The results from our analysis indicated that there is a relationship between independent variables of financial information access, Bank and business support service, the structure of banks and the collateral requirement by commercial banks and such influence SMEs capacity to attain competitive growth in Lesotho. In addition, the results indicated that Basotho entrepreneurs and managers see the predictors as critical factors of access to finance that constrained most enterprises access to needed credit from banks and such influence SMEs capacity to attain competitive growth in Lesotho.
Conclusions: The study concludes that access to finance significantly affect the competitive growth of SMEs in Lesotho. Thus, this study suggests that several specific and harmonized financial policy actions are needed in the Lesotho financial market to identify enabling policy that ease enterprises access to adequate funding programs. These funding programs should target improved financial schemes that are coordinated, competitive and directed towards SMEs access to finance; harmonized credit policy which guarantees a win-win for SMEs loan applicants and the financial market operators.