Examining factors that militate against small and medium enterprises (SMEs) in raising finance in Ghana
Access to finance has been earmarked as one of the critical constraints to Small and Medium Enterprises (SMEs) sector in Ghana. This paper aims at conducting an indepth literature review by employing social capital theory to demonstrate that SMEs in Ghana are militated against raising finance for their operations. Such challenges include lack of collateral, existence of information asymmetry, inadequate technical and managerial skills, negative perception of SMEs and limited access to finance. The paper suggests various ways in which these challenges can be addressed which include; the need for social capital development through network, improving SMEs information management system, enhancing technical and managerial skills among entrepreneurs and development of friendly SMEs legal and regulatory framework. Likewise, the paper suggests alternative sources of finance which include; crowdfunding, business angels, bootstrapping, capital market financing and financial resource building effort. The paper therefore concludes by making social network as significant prerequisite to be developed by SMEs as an effective mechanism to mitigate their financial challenges.