Financing Problems of Small and Medium Scale Enterprises (SEMs) in Benin-City, Edo State

Abstract

Previous studies have shown that SMEs in Nigeria are characterized by many problems especially the financing problems. This work was carried out to identify the financing problem of SMEs in Nigeria. The objectives of this research work are majorly to identify the various sources of fund accessed by SMEs operators and to determine the problems encountered by SMEs in accessing these funds. In order to achieve these objectives, primary source of data was used with the aid of questionnaires. The major analytical tools employed were frequency distributions, percentages and simple averages which were achieved by means of the SPSS. It was discovered that most SMEs operators are unable to access government incentives and thereby rely mainly on retained earnings to finance their businesses. The financing problems of SMEs are institutional in nature. They are bureaucratic bottlenecks, high interest rates and lack of collateral security. Financing problems of SMEs in Nigeria can be reduced by abolishing stringent conditions to borrowing, reducing the cost of funds and proper awareness of government incentives to the SMEs operators and monitoring closely the vario