Abstract

Fatoki Olawale* and A. Van Aardt Smit

This study investigates the impact of the business environment on the availability of trade credit to new SMEs in South Africa. The literature identifies 78 questionnaire items. Exploratory factor analysis reduces the items to 44 items under nine factors that include both internal factors and external factors. The internal factors were labeled as managerial competencies, collateral, networking and business and financial information. The external factors were labeled macroeconomic, legal, ethics, crime and corruption. Empirical research was conducted to investigate the impact of the nine factors on the availability of trade credit to new SMEs. The instrument used was the self-administered questionnaire. The statistical analyses included factor analysis, item analysis and Pearson correlation. The results show that both the internal and external factors significantly impact on the availability of trade credit to new SMEs.