THE IMPACT OF COMMERCIAL BANK ON SMALL BUSINESS FINANCING
INTRODUCTION TO CHAPTER ONE
1.0 BACKGROUND OF THE STUDY
Small-scale enterprises serve as the foundation for industrial development in underdeveloped nations such as Nigeria. This is due to the fact that small – size firms create a solid industrial base and a balanced distribution of industrial development (NwankoG.O 1991).
A detailed examination of the performance of small – scale firms in Nigeria, on the other hand, reveals a scenario of neglect, apathy, and general underdevelopment.
This pathetic situation could be attributed to a number of problems impeding the development of small – scale businesses such as managerial problems, marketing problems, a lack of high calibre employees, and a lack of quantitative data, among others.
The aforementioned problems have hampered the growth of small-scale businesses. The acute lack of essential capital to meet the business operating requirements has bred erratic performance and its dwindling influence in the development of the nation's economy.
Small-scale enterprises' challenges in acquiring essential credit facilities, as well as a variety of credit issues, have exacerbated the financial problems confronting these industries.
A key issue is obtaining the proper financial facilities from the formal money markets at the right quality and on satisfactory terms.
These businesses have a significant impact on the lives of everyone in society. Small independent enterprises can be found everywhere and in every sector of work, as well as in every neighbourhood. Because this company is as old as man, almost everything he does in life involves some aspect of business.
However, the role of small businesses in our economic history has been one of distribution and contribution. Although its relative importance has declined with the growth of large businesses, small businesses continue to make significant contributions to the country's economy. Today's business in Nigeria includes both major and small enterprises.
Because of their critical contribution to the national economy, small businesses must now enjoy greater prominence than ever before. Small business is so important that no part of our economy could function without a steady flow of production and services.
Small scale enterprises operate manufacturing plants, retail stores, whole sales, drugs, computers, construction firms, and hundreds of other types of businesses.
government agencies are responsible with, among other things, carrying out obligations and delivering utilities as may be regulated from time to time on behalf of the government in order to raise the standard of living.
Commercial Bank (COMMERCIAL BANK) is tasked with providing medium and long-term finance through equity finding loan and lease financing, guarantees, investment in corporate Bonds business development service, co-financing, working capital finance and promotion of Small scale enterprises and industrial projects, co-sponsoring financial institutions and Small scale enterprises.
Nigeria Industrial Development Bank Limited was created in 1964 following the reconstitution of the Investment Company of Nigeria Limited (ICON). The NIDB was established largely to accelerate Nigerian industrialization.
According to Uzuaga W. (1981), the bank was to be conceived shortly after Nigeria gained independence in 1964. The plan was to establish a development financial institution that would act as a specialised route for channelling funds from within and beyond the country to the nascent nation's industrial sector.
In the current Obasanjo administration, the bank (NIOB) was recently amalgamated with Nigeria Bank for Commerce and Industry (NBCI) and National Economic Reconstruction Fund (NERFUND) and renamed Bank of Industries.
1.2 STATEMENT OF THE PROBLEM
The most obvious challenge for commercial banks is how to provide efficient financial resources, technical support, security on loans given out to customers (SSE), and appraisal of projects that are financed,
which may take longer than stated at the outset. Also, depending on the nature and complexity of the project, it may take one to two years, or even longer, from the time the project was selected to the time it was commissioned.
How effectively do small and medium-sized businesses (SME) use the services provided by commercial banks? Also, are they competent to deal with the policies implemented by commercial banks in acquiring loans and other services offered, such as interest rates on capital collateral facilities and government-made policies?
1.3 OBJECTIVE OF THE STUDY
The study's goal and purpose are as follows:
i. To examine the diverse effects of commercial banks on small company finance.
ii. To investigate the government's role in small business finance in the Kaduna South local government.
iii. To examine the numerous ways in which small businesses have contributed to the growth of the Nigerian economy.
iii. To look into the difficulties that small businesses have in obtaining loans from commercial banks.
1.4 research QUESTION
1. What are the effects of commercial banks on small company financing?
2. What are the government's roles in subsidising small businesses in Kaduna South local government?
3. What are the many ways in which small businesses have contributed to Nigeria's economic growth?
4. What are the challenges that small businesses encounter when seeking a loan from a commercial bank?
1.5 IMPORTANCE OF THE STUDY
The study's significance is that it will serve as a resource for other students who may write or conduct research on a similar topic, as well as a recommendation to solve difficulties related to the financing of small businesses.
It also acts as a guideline to Commercial Banks in carrying out their customer functions as well as the way of providing services to customers (SSE).
This research is also required for the award of the National Diploma in banking and finance from Kaduna Polytechnic.
It would also benefit Kaduna South Local Government workers who will implement the recommendations presented at the end of this research.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
This research will look at the activities and roles of commercial banks in financing small businesses in Kaduna South Local Government Area.
It is not an easy task for a student to conduct research without encountering two or more issues. One of the difficulties encountered by the researcher was a lack of suitable information,
which the research could access for necessary research work, as some of the organization's personnel were very busy and required some signatory from the department before releasing information to be used.
Finance, in particular, presents a significant difficulty in carrying out this research. On the other hand, the academic workload associated with this research was extremely time-consuming given the deadline for completion and submission of this work.