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The Role Of Commercial Banks In Small Scale Entrepreneurial Development In Enugu State
[CASE STUDY OF UBA AND UNION BANK OF NIGERIA PLC]
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1.2 STATEMENT OF THE PROBLEM
There is dearth of financial
institutions which cater for long and medium term credit needs of
businesses operating in the economy. Small scale enterprises are no
exceptions to these, and they suffer a great deal for want of capital
for development and expansion of the economic survival of the country.
It cannot be over emphasized that they have moved from the subsistence
level of pre-indigenization period to a position of importance in the
country’s industrialization process. In an attempt to modernize many
small scale enterprises, their standard of operation has moved into the
capital intensive stage. The need in many cases is beyond the financial
capability of the entrepreneurs who set up the business. The major
alternative for the provision of such capital is the financial
institutions and among the financial institutions operating in the
country, commercial banks are the major sources of credit to the various
sectors of the economy.
However, it is common knowledge that
getting financial support from commercial banks has been grossly
inadequate for budding indigenous entrepreneurs and even for those who
have been in the manufacturing business for a long term. Three types of
credit are usually required by small scale enterprises. They include:
i.
Short Term Loan: This type of credit is used to finance yearly
operation until the product or proceeds from the industry are sold. The
amount which is involved in this type of credit is usually small but
lack of this type of credit is most accurately felt by small scale
entrepreneurs who have little or no saving upon which to withdraw as
they are mostly beginners.
ii. Medium Term Loan: This type of loan
is for more than one year maturity period but not exceeding three to
five years. This loan is mostly required for acquisition of inexpensive
equipment with relatively short life span.
iii. Long Term Loan: This
type of credit is necessary for acquisition of major industrial
machines, improvement in industrial equipment, building and land: It is a
type of loan that the maturity period is for quite a longer duration.
Small
scale enterprises therefore can be a powerful instrument in bringing
about a revolution in industrial practices and in firms productivity
especially if supplied in sufficient quantity and used effectively. The
study therefore identifies small scale entrepreneurial financing by
commercial banks as a major role to entrepreneurial development because
finance is just one of the major factors of production.
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ABSRACT - [ Total Page(s): 1 ]The subject matter of this research work is to evaluate the extent to which Small Scale entrepreneurs in Enugu have been able to obtain loans and raise finance from Nigerian Commercial Banks as a major source of finance to the economy. The main objective of the study is to establish the role of Commercial Banks in financing Small Scale Enterprises (SSEs) in Enugu .A review of literature was done to ensure the conclusion of the study. Based on the analysis, Commercial Banks comply with the Centra ... Continue reading---
