Assessing the regulatory factors influencing Small Medium Enterprises access to loans. A case study of Commercial Banks of Malawi beneficiaries in Lilongwe.

Abstract
This study examined the regulatory factors influencing Small and Medium Enterprises’ access to loans from commercial banks in Malawi, with a specific focus On Small Medium Enterprises that have obtained credit from Commercial Banks of Malawi in Lilongwe. Despite the critical role Small Medium Enterprises play in national development, many continue to face financing challenges, particularly due to regulatory requirements imposed by financial institutions. This study sought to assess how collateral requirements, interest rates, borrowing procedures, and unsettled credit history influence Small Medium Enterprise access to loans.
The study adopted a quantitative research approach supported by a positive philosophy, allowing objective measurement of relationships between variables. A structured questionnaire with closed-ended questions was administered to a sample of 120 Small Medium Enterprises, drawn from the population of businesses that accessed loans at Commercial Banks in Lilongwe. Out of these, 100 Small Medium Enterprises fully completed the questionnaire, representing an 83.3% response rate, which is considered adequate for reliable statistical analysis. Data were analyzed using the Statistical Package for Social Sciences (SPSS), employing descriptive statistics and binary logistic regression, suitable for studies with a binary dependent variable such as loan access success (Yes/No).
This implies that favorable collateral conditions, manageable interest charges, settled credit history and simplified procedures increase the likelihood of Small Medium Enterprises securing credit. The findings contribute to existing literature by providing empirical evidence from Malawi’s banking environment, particularly which remains under-explored in Small Medium Enterprise finance research. The study recommends that Small Medium Enterprises improve their financial documentation and collateral readiness, while banks simplify procedures and improve awareness of loan requirements. Policymakers, particularly the Reserve Bank of Malawi, are encouraged to review credit regulatory frameworks to enhance Small Medium Enterprise financial inclusion.