Brief Introduction

Small and Medium Scale Enterprises (SMEs) are important engines of economic growth, jobs and social cohesion. SMEs play an important role in the economies of many developing countries including Nigeria. Thus, governments throughout the world focus on the development of the SMEs sector to promote economic growth Finlayson, (2003).

However, the creation, survival and growth of SMEs are often hampered by access to finance. Thus access to SMEs finance has become a key priority in developing countries like Nigeria. Therefore, Non-availability of debt finance to finance operations and expansion is one of the major causes of failure for SMEs in Nigeria.

According to Global Entrepreneurship Monitor (GEM) Survey in 2008; financial constraint is the primary exit reason for most SMEs failure in Nigeria. However, the need for SMEs growth in Nigeria is beyond question, but access to finance is a major factor stagnating the way of its growth, as a financing tool, debt financing has a distinct advantages over equity financing for the development of SMEs, but debt financing in Nigeria presently comes with significant challenges as can be seen from low responses of commercial banks to finance SMEs.

There is evidence that most SMEs in Nigeria with low capital formation raise capital through loans from family and friends because at the initial stage, majority of young budding entrepreneurs lack laudable forms of collateral, business plans and feasibility studies to actually meet the requirement and convince banks to grant them loans Ebube, (2011).

Table of Contents

Content Pages
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Table of Contents v
Abstract vii

CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Aims and Objectives of the Study 4
1.4 Research Questions 4
1.5 Research Hypothesis 5
1.6 Significance of the Study 5
1.7 Operational Definition of Terms 5

CHAPTER TWO: LITERATURE REVIEW
2.1.1 Conceptual Review 7
2.1.2 The Concept of Commercial Banks’ Credit 7
2.1.3 The Concept of Small/Medium Enterprises (SMES) 8
2.1.4 Sources of Finance Available to SMEs 10
2.1.5 Characteristics of Small and Medium Scale Enterprise in Nigeria 13
2.1.6 Role/Benefits of Small and Medium Scale Enterprises in the
Nigerian Economy 14
2.1.8 Solutions to Financing Problems of Small and Medium Scale
Enterprises in Nigeria. 21
2.1.9 Types of Loan Facilities Granted 22
2.1.10 The Role of Banking Sector in Financing SMES: 24
2.1.11 Government imitated programmes to boost SMEs in Nigeria 25
2.2 Theoretical Framework 26
2.3 Empirical Review 28

CHAPTER THREE: METHODOLOGY
3.1 Introduction 32
3.2 Restatement of Hypothesis 32
3.3 Source of Data 32
3.4 Method of data analysis 33
3.5 Model Specification 33
3.6 A prior expectation 34
3.7 Test of Reliability 35

CHAPTER FOUR: PRESENTATION OF RESULT AND DATA ANALYSIS
4.1 Introduction 37
4.2 Presentation of Ordinary Least Square Result 37
4.3 Interpretation of regression results 38

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 40
5.2 Conclusion 41
5.3 Recommendations 43

REFERENCES 44
APPENDIX I 49