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2.2 SME Definitions
As Ward (2005) mentions, there is no standard definition for SMEs as the definition relies uponwho is defining it and where it is being defined. Taking into example SME’s in Canada, a SMEis defined as an enterprise that has less than 500 employees and small enterprise as one that hasless than 100 employees. The World Bank defines SMEs as having no more than 500 employees.
SMEs can be defined in two ways: based on the number of employees in an enterprise and/or theenterprises fixed assets. According to Purcell (2002), the size of the enterprises employment oremployees is the most important criterion used in Samoa. It is noted though, that that one must be cautious when defining SME’s based off of fixed assets reason being the continuousdepreciation in the exchange rates, which makes the definition outdated.
UNIDO defines SMEs in developing countries based off of the number of employees in anenterprise. A small enterprise has between 5 and 19 employees, taking into example theubiquitous and familiar small shops that can be found within the cities or towns such as hairdressing saloons and convenience stores. A medium enterprise has 20 to 99 employees which soinclude manufacturing and exporting companies. In Samoa, a small business employs 5 or lesspeople and a medium enterprise employs 40 or less employees (Purcell, 2002). What this showsis that in some countries, especially developed ones, the upper most limit is not as low as is thecase with SME’s in Samoa. Therefore, all SME’s studied within this paper would necessarily be classified as small.
Figure 2: Report by the Chief Executive Officer – DBS Annual Report 2017
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Chapter 3: Research Methodology ........................... 27
3.1 Sampling and Data collection.............................. 28
3.1.1 Secondary data................................. 28
3.1.2 Primary Data.......................... 28
Chapter 4: Empirical Findings Analysis ......................... 32
4.1 Assessment of Loan use and repayment for DBS, NBS, SCB, ANZ .................... 32
4.2 Many SMEs in Samoa are informal in nature .............................. 33
Chapter 5: Discussion and Conclusion ....................... 40
5.1 Limitations of the Study........................... 40
5.2 Discussion ............................. 41
Chapter 4: Empirical Findings Analysis
4.1 Assessment of Loan use and repayment for DBS, NBS, SCB, ANZ
SME’s gained access to financing and were provided with business advisoryservices and training.New businesses were started while existing ones were expanded through the assistance of theguarantee scheme and microfinance facility (MFF). Income opportunities were provided by theproject as indicated in the table below, by the profits of enterprises. However, the number ofenterprises in the guarantee scheme that reported profits decreased over time. As regards the MFF,most of the microfinance clients reported an increase in their incomes after joining the program.The relatively better repayment performance of MFF clients indicates that borrowers had the cashflow to repay their loan, and their continued use of the microfinance services suggest that the loanhelped improve their welfare.
Under the guarantee scheme, the sample businesses sourced their loans from the following banks:ANZ (14%); DBS (35%); SCB (37%); NBS (21%); and Westpac (10%). On average, the samplebusinesses took out a loan from these banks only once. The average amount borrowed for the firstloan was ST14, 100. The loan proceeds were used as starting capital for business by 41% of therespondents, while 59% used the proceeds as additional working capital for existing businesses.
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Chapter 5: Discussion and Conclusion
5.1 Limitations of the Study
Limitations in research refer
