CHAPTER ONE
1.0 INTORDUCTION
1.1 BACKGROUND OF THE STUDY
Small scale business can be define as a business that employs a small number of workers and does not have volume of scale. Such enterprise are generally privately owned and operated sole Proprietorship co-operations or partnership.
Small Scale business are the dominant form of business enterprises in Nigeria, thus this research work examines the factors that influences or militate against bank lending in Nigeria.
However, Small business in Nigeria has suffered a major setback and this is as a result of discrimination by the Nigeria Financial Institutions. Though, these institution discriminate against Small Scale Industrialist but, this is at the expanse of the nation’s economic development.
The usual excuse of not accommodating small scale industrialist is bad risk. Several years ago, Central Bank of Nigeria gave directions to the money deposit banks to make available to small scale industries that at least 16% of their loanable funds till date; hardly have any money deposit bank complied with the directives, the banks have preferred to pay penalties rather than grant loans as required to small scale industries.
The Small Scale sector lack insufficient financial resources to aid its operation even the government have put in place many specialized scheme to provide their financial needs.
The inability to raise funds liberally from banks and the resultants stagnation or out right closure of such business calls for this research work. This work aimed at finding possible solution to these problems and the alternative financing options for small scale industrialist.
1.2 STATEMENT OF THE PROBLEM
Small scale industries have been described as a vital instrument for economic development, but for financial constriats which is an hindrance for the establishment or Operation of Small Scale business, absence of clear title to land etc.
Therefore, the content that the operation of these industries is difficult as most of them go off the scene soon after establishment is because of poor system of financing; it is in view of this that the researcher has decided to undertake this work in order to proffer solution of these problem.
Negative factor that influence bank willingness to grant loan to small scale business industrialist.
Banks sometimes use low standard in accessing the credibility of loan appreciation.
Possible solution need to be recommended to enable small scale industrialist problem to be minimized.
The delay in repayment of loan in small scale industrialist.
1.3 OBJECTIVE OF THE STUDY
This research work is conducted in order to investigate bank lending to small scale industrialist, the problem associate with its prospects.
However, the study is carried out to achieve the following objectives:
To identify the factors that influence bank willingness to grant loan the small scale industrialist.
To determine the different standard used by banks in accessing the credibility of loan appreciation.
To recommend possible solution through which small scale industrialist problem can be minimized.
To identify causes of delay in repayment of loan in small scale industrialist.
- RESEARCH QUESTION
- What are the factors that influence bank willingness to grant loan to small scale industrialist?
- What are the different standard use by banks in accessing the credibility of loan appreciation?
- What are the possible solution through which small scale industrialist problem can be minimized?
- Does bank encounter delay in the repayment of loans in small scale industrialist?
1.5 SIGNIFICANCE OF THE STUDY
This study has become necessary in view of the fact that the present and future economic advancement of this country lies in the dynamism and growth of small scale business.
It is therefore expected that this study will be of importance to small scale industrialist bringing to their knowledge the standard used in accessing the stability of loan appreciation.
The study will also lay emphasis on the area where small scale industrialist default in loan management. It also to create awareness to bank on the nature of problem they may encounter in granting loan to small scale business.
Finally, It has also offered the research an insight into the operations of small scale business, their source of funds, loan management problems and prospect in Nigeria.
It will be useful also to the policy maker’s in mapping out policies for small scale industries, society, student and institution.
1.6 SCOPE OF THE STUDY
The scope of the study is limited to lending process of banks to small scale business in Onitsha Metropolis.
The study covers some branches of first bank, Zenith bank, Ecobank, Diamond bank, Union bank Nigeria Plc in Onitsha.
1.7 DEFINITION OF TERMS
INDUSTRIALIST: The owner or manager of a business.
FINANCING SCHEME: Monetary support for an enterprise systematically planned or arranged.
RISK OF DEFUALT: This means the risk that the borrower will not satisfy the contractual Obligation paying the principal and interest.
FINANCIAL INSTITUTION: This comprises of all banks that operate within the economy such as money deposit banks. They are the key actors in performing the role or financial intermediaries.
CREDIT FACILITY: This is financial assistance of a customer to obtain from a book in form of loan.
LOAN APPLICATION: A person who applies for a sum of money.
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