Sources of Financing and Their Conditions: Evidence from Small and Medium Enterprises in Ghana

In Ghana, small and medium enterprises (SMEs) account for about 90% of businesses and contribute to over 80% of employment. This study aimed to identify the sources of finance for SMEs and the conditions for securing funding in Ghana. A mixed-methods approach was employed, including qualitative and quantitative data. Data were collected through face-to-face interviews with 400 SMEs within 12 regions in Ghana. This study revealed that most SMEs' funding sources include business surplus, short-term debt, government institutions, grants, and supplier credit. SMEs with a higher knowledge of various finance sources incorporate diverse funding. This study found that the cost of acquiring debt is higher than in neighbouring countries, averaging 8.07% per annum in real terms. The procedures and the time to secure funding were reasonable and timely. The study recommended the promotion of alternative financing options such as crowdfunding and the Ghana Skills Development Fund for SMEs.