Whereas business credit is given to increase the performance of small and medium enterprises (SMEs), the beneficiary SMEs in Southwest Nigeria still displayed stunted revenue growth. A high failure rate in SMEs is still reported despite their increase access to business credit. This study examined effect of business credit affordability (interest rates, collateral requirement, and loan administration) on revenue growth of small and medium scale enterprises in Southwest, Nigeria.The study adopted cross-sectional survey research design.
Data were obtained through primary source using self-developed structured and validated questionnaire. The population of the study comprised 26,744 registered Small and Medium Scale Enterprisesoperating in South-West, Nigeria. Cochran’s sample size formula was employed to determine sample size of 843 SME owners/managers. Partial Least Square Structural Equation Modeling (PLS-SEM) through Smart PLS 3.2.8 was employed to analyze and test hypothesis. The path analysis and bootstrapping results showed that collateral requirementand loan administration have positive and significant effect on revenue growth of small and medium enterprises in Southwest, Nigeria. The study concluded collateral requirement, and loan administration are major predictors of revenue growth, while interest rate has no significant effect on revenue growth. The study recommended that Central Bank of Nigeria should consider revising their policy on interest rate charged to single digit, credit appraisal techniques, transaction costs, debt collection process and limitation on the amount of loan granted that accommodate SMEs financial needs.