Access to Commercial Banks Lending on the Financial Performance of SMEs in Pharmaceutical Business in Kwara State, Nigeria

Abstract

In Nigeria, small and medium-sized Enterprises (SMEs) are vital forces behind economic expansion and advancement. Particularly in the healthcare industry, pharmaceutical SMEs are crucial to expanding access to reasonably priced and necessary pharmaceuticals. Sequel to this, this study examines the effect of access to commercial banks’ lending on the financial performance of SMEs in Pharmaceutical Business in Kwara State, Nigeria. Data was gathered from 140 registered SMEs in the pharmaceutical industry using a survey research approach and structured questionnaires. The data was analyzed using ordered logistic regression and descriptive statistics. The results showed that financial performance metrics like revenue growth and return on investment were considerably improved by commercial bank financing (P=0.013). The study concludes that lending pharmaceutical SMEs by commercial banks significantly improves their financial performance. This is since loanable funds are accessible to assist routine business operations, operational capital and income generated by pharmaceutical SMEs are alleviated, and payback periods are flexible. To maintain flexible loan payback periods, competitive interest rates, and straightforward processes for retrieving deposited cash, the study advises collaboration between commercial banks, pharmaceutical SME associations, and financial regulatory bodies. By maximizing the benefits of loan support, these programs will promote financial growth and sustainability for pharmaceutical SMEs.