ABSTRACT 

The study provides a comprehensive discussion on credit ration of Small and Medium Enterprises (SMEs), its effect on the growth of SMEs and subsequent effect on employment in Ghana. Access to finance has been noted as one of the major challenges upending the survival and growth of the SMEs sector in Ghana. The problems of access to finance, gaps and the reasons for the gaps in SMEs financing in Ghana are discussed. Gaps in SMEs financing were discussed in relation to credit rationing theory which advocates that agency problems and asymmetric information are the main reasons for the credit rationing behaviours of credit providers to SMEs. This paper is a study to identify gaps in literature regarding the financing of SMEs in Ghana using primary data to gather information. Out of 200 questionnaires administered, 175 were responded to and used for the study. Descriptive analysis was used to arrive at the major findings in this thesis. From the study, the findings were that, major factor that influenced loan application by firms in Ghana were inflation rate and external business environment while the major factor that influenced credit rationing was lack of securable collateral. The effect of credit rationing on the growth of SMEs is that credit is needed to expand business. Therefore, it is recommended that policy recommendations aimed at solving access to finance challenges and must be empirically tested on a regular basis and progress in that regard must be constantly monitored and revised to eradicate the problems.