Leasing, Alternative Source of Financing for Small & Medium Enterprises (SMES) in Ghana

Abstract

Inadequate funding has been cited as one of the major challenges limiting the performance of most SMEs, from both developed and developing countries alike. Several researches conducted on SMEs access to finance shows massive dependents on loans. Whiles an alternative sources such as leasing and factoring are underutilization. Based on the case in Ghana, this paper emphasizes the importance of leasing as an alternative cheaper way of financing SMEs. In furtherance, this paper examines the dynamics of SME leasing in the form of survey and how SME leasing can be improved through state interventions and other finance enhancement techniques for the betterment of SMEs financing. Survey conducted among some selected SMEs and leasing companies in Ghana were used as the benchmark for leasing as an alternative source of funding for SMEs. The results showed that, there is, in general, a strong correlation among the various dynamic factors of leasing in terms of financing options available to SMEs. The leasing sources also exhibited, to a very large extent, dependence among each other.