What It Is: Term loans from a bank or commercial lending institution...
Problems of SMEs in the Nigerian Economy
Inadequate and inefficient infrastructural facilities, which tend to escalate costs of operation as SMEs are forced to resort to private provisioning of utilities such as road, water supply, electricity, etc
Lack of adequate credit for SMEs traceable to the reluctance of banks to extend credit to them owing among others to poor documentation of project proposals as well as inadequate collateral by SME operators
Weak demand for products arising from low and dwindling consumer purchasing power and lack of patronage of locally produced goods by those in authority
Incidence of multiplicity of regulatory agencies and taxes which has always resulted in high cost of doing business and poor management practices, and low entrepreneurial skill arising from inadequate educational and technical background of many SME promoters
Developmental policies weigh in favour of large firms and sometimes foreign –owned firms leaving SMEs in a distressed and vulnerable position
Regulatory compliance which ordinarily reduces the cost of doing business for the private sector and incurs costs- time and money, adverse effects on small firms.
Under capitalisation,difficulty in gaining access to bank credits &other financial markets,corruption,lack of transparency, very high bureaucratic costs but most damagingly ,a seeming lack of government interest in & support for the roles of SMEs in national economic development and competitiveness.
The most worrying of all among these challenges is funding.Most new small business enterprises are not attractive prospects for banks as they want to minimize their risk profile
In Nigeria the situation is not very different until recently, when the bankers committee intervened in 2001 with a scheme themed “Small and medium industries Equity Investment Scheme”(SMIEIS)