Small micro enterprises have been known to contribute in economic growth of both developed and developing countries. Micro-enterprises in employment tend to be higher in developing countries, which are typically more focused on small scale production.  As a reason, policy provision is crucial in driving businesses toward self-sufficiency and achieving their full potential as determinants of economic growth [1].

Microfinance is an effective strategy for poverty reduction; it is also associated with the development of micro-enterprises which in turn, increase an income and consumption of beneficiary [2].

Finance is available to small enterprises from both external and internal sources. Their internal sources came from the fund and were derived through business operations, which are typically insufficient for small firms. As a result, there is a demand for funds from outside sources. Friends, relatives, and financial institutions such as microfinance lending companies are among the external sources of funds [3].  Small businesses' access to financial services is often considered as one of the factors limiting their ability to profit from credit and other services [4]. Small businesses' access to these services has been acknowledged as a vital component of successful capacity building in order to compete in business and help alleviate poverty. Microfinance institutions were also established in the later years to oversee small scale enterprise [5]. 

When it comes to small enterprises, there are numerous obstacles to overcome when it comes to accessing microfinance services. A microfinance institution has specific conditions that small businesses must follow in order to acquire microcredit [6]. Physical collateral plus a certain quantity of money in savings are required to secure the loan. Small businesses find it difficult to obtain financial services due to a lack of collateral and fair interest rates [3].

Access to funding for small firms in formal conventional banks remains a challenge. This is because formal bank terms and conditions are difficult to maintain and impossible for small firms [5].

Small businesses have a number of barriers to using microfinance services. A microfinance institution has specific conditions that small businesses must follow in order to acquire microcredit [6]. To secure the loan, physical assets and some money in savings are required. Small businesses find it difficult to obtain financial services due to a lack of collateral and fair interest rates [3].

Traditional banks continue to make it difficult for small firms to secure finance. This is due to the difficulty of maintaining official bank terms and conditions, which is impractical for small businesses [5].

In Estancia most of the businesses are from the micro-enterprises.  As it is heard and even noticed by the researchers mostly of these micro-enterprises are dependent on loans to sustain their business, which could be from either formal or informal financing.  Sari-sari stores are among the micro-enterprises observed by the researchers which mostly rely on financing.  So, the researchers wanted to find out if the sari-sari store owners who indulged in borrowing money for their business had easy or difficult access to financial institution, so this study would like to find out the challenges on financial access among sari-sari store owners.

This study utilized the descriptive survey method of research.  This classification of research attempts to analyze, interpret and report the present status of the subject matter or problem.  It uses questionnaire or other instruments to generate data prepared by the researchers. Although the descriptive method relies upon observation for the acquisition of the data, those data must then be organized and presented systematically so that valid and accurate conclusions may be drawn from them [7].

The respondents of the study were the sari-sari store owners in Estancia who were chosen through purposive sampling.  These were owners of sari-sari stores who willingly accepted the request of the researchers to answer the questionnaire.  They were classified according to their age, sex, average-monthly income, and type of financial access.

This study utilized the researchers-made questionnaire which was validated by experts and was test for reliability. The instrument had two parts. Part 1, is the personal information sheet to elicit the information among the chosen participants, their age, sex, average monthly income, and types of financial access.

Part 2, is the questionnaire checklist which is composed of statements/challenges on financial access among sari-sari store owners in Estancia.

Challenges on Financial Access among Sari-Sari Store Owners 

Challenges on financial access among sari-sari store owners when taken as a whole was determined using mean and standard deviation.

Result showed that, Strict collateral requirements (M=1.900, SD=0.8638); No collateral (M=2.208, SD=0.8188); High cost of repayment (M=1.983, SD=0.3885); Short repayment term (M=1.958, SD=0.4180); High credit processing fees (M=2.141, SD=0.4727); High interest rates (M=2.000, SD=0.4116) were “slightly a challenge”, Lack of information/knowledge in terms of interest paid on loan (M=2.775, SD=0.5417); Lack of understanding of the services that financial institutions/ banks offer (M=2.800, SD=0.4780); Lack of  Lack of understanding of the financial institutions/banks loan procedure (M=2.816, SD=0.4487) were “not a challenge”, Unwillingness of people to act as guarantors/co-makers (M=1.400, SD=0.6786) was a “challenge.”

The result implied that there are really challenges among sari-sari store owners to access loan, specifically the unwillingness of people to act as guarantor/or co-makers while the rest were not a problem at all or could be a problem but not that much.

The result agreed to the study of Gichuki states that one of the key challenges hindering micro and small enterprises from accessing credit facilities was unwillingness of people to act as guarantors/co-makers. Table 1 shows the data.

Table 1: Challenges on Financial Access among Sari-Sari Store Owners 

Note:1.00-1.66 challenge, 1.67-2.33 slightly a challenge, 2.34- 00 not a challenge

Result implied that formal and informal banks had different deliberation in terms of strict collateral requirement and unwillingness of people to act as guarantors/co-makers.  It means that in accessing funds from formal bank loans cannot be granted without any collateral presented and co-maker since there is a standard procedure or process to follow while in an informal sector one can borrow immediately without any collateral requirement, with only the help of friends, neighbours and relatives as long as evidence of having a business is present.

The study agreed to the study of Gichuki et al. [5] and of Matavire et al. states that small and medium enterprises failed to secure loans from formal banks because of strict collateral requirement. 

The study negates the study of Flora [6] states that informal sector requires a collateral requirement from individuals which contribute to their failure of accessing microfinance services because some of the microfinance institutions are not using group lending to secure loans, but collect collateral or use the guarantee-based approach.  This result is the report conducted in Cameroon by Chiyah and Forchu.

Findings revealed that unwillingness of people to act as guarantors/co-makers was a “challenge”, while strict collateral requirements, no collateral, high cost of repayment, short repayment term, high credit processing fees and high interest rates were “slightly a challenge”, then lack of information/ knowledge in terms of interest paid on loan, lack of understanding of the services of financial institutions banks offer, lack of understanding of the financial institutions/bank procedure were “not a challenge”.

Among the male lack of information/knowledge in terms of interest paid on loan, lack of understanding of the services of financial institutions banks offer, lack of understanding of the financial institutions/bank procedure were “not a challenge” while strict collateral requirements, no collateral, high cost of repayment, short term of repayment, high credit processing fees, high interest rates and unwillingness of people to act as a guarantors/co-makers were “slightly a challenge”.

When classified as to type of financial access, unwillingness of people to act as guarantors/co-makers for formal banks was a “challenge” but for informal banks slightly a challenge.  Strict collateral requirements for formal banks were a “challenge” but as for informal banks “not a challenge”.  No collateral for formal banks was “not a challenge” but for informal banks “slightly a challenge”.  High cost of repayment, short repayment term, high credit processing fees, high interest rates for formal and informal banks were “slightly a challenge”.  Lack of information/knowledge in terms of interest paid on loan, lack of understanding of the services of financial institutions banks offer, lack of understanding of the financial institutions/bank procedure for formal and informal banks were “not a challenge”.

The study found out  that unwillingness of people to act as guarantors/co-makers and strict collateral requirements were the great challenges hindering sari-sari store owners from accessing credit, followed by strict collateral requirements, no collateral, high cost of repayment, short repayment term, high credit processing fees, high interest rates as moderate challenges and then lack of information/knowledge in terms of interest paid on loan, lack of understanding of the services of financial institutions banks offer, lack of understanding of the financial institutions/bank procedure as small challenges.

Recommendations

Based on the findings and conclusion of the study, the following were recommended:

• The microfinance institutions may try to come up on a program of educating the sari-sari store owners on how they can go about obtaining credit.  Come up with products for sari-sari store owners where collateral requirements are lenient.  Consider lowering their interest rates as a way of encouraging sari-sari store owners to borrow from them

• The sari-sari store owners may try to put in place proper accounting practices and adequate internal control systems which will check problems that make sari-sari store risky for credit institutions

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2. Chowdhury, S. and P. Mukhopadhyay. "Empirical assessment of the impact of microfinance on quality of life." 2012, http:// www. pbr. iobm. edu.pk/ wp-content/ uploads/ 2016/ 01/1-Arshad-Ali.pdf. Accessed 15 Oct. 2019.

3. Woldie, A. et al. "Challenges of microfinance accessibility by SMEs in Tanzania." 2012, https:// www. semanticscholar. org/ paper/. Accessed 20 Nov. 2019. 

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