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BANKS’ FINANCING
SMALL SCALE BUSINESS UNIT
(A CASE STUDY OF
UNION BANK OF NIGERIA PLC ENUGU BRANCH)
ABSTRACT
The purpose of the project is to know
to the extent small businesses in Nigeria has been able to obtain loans and
advances from Nigeria commercial bank as a major sources finances to the
economy. The term “small scale business” are those small businesses that fall
within the category of business with not more than five hundred thousand naira
(N500, 000) as their annual turnover.
The findings of this study will help to
make recommendation and suggestions for improvement of the present situations.
Also with the findings of the study, the bank will become conscious of the
peculiar problems facing importance to the economic recovery and self reliance.
TABLE OF CONTENTS
Chapter one: Introduction
1.0
Background of the study
1.1
Statement of the problem
1.2
Objective of the study
1.3
Research Question
1.4
Scope of the study
1.5
Significance of the Study
1.6
Limitation of the study
1.7
Definition of Terms
CHAPTER TWO REVIEW OF HE RELATED
LITERATURE
2.0
Review of the Related Literature
2.1
The Theoretical Review
2.1.1 Empirical Review
2.2
Importance of small scale Business
2.3
Assistance provided by Financial Institutes in the Development
of small scale Business
2.3.1
Assistance provided by Commercial Banks
2.3.2
Functions of Nigeria Bank for Commerce and Industries (NBCI)
2.3.3
Functions of Agricultural and co-operative Bank (NACB
2.3.4
Functions of the Nigerian Industrial Development Bank ( NIDB)
2.3.5
Functions of the people’s Bank of Nigeria (PBN)
2.4
Government policies for promoting small and medium
scale enterprises
2.5
The major forms of Financial Assistance
2.6
Problems facing the small scale Businesses
CHAPTER THREE:
3.0
Research Design and methodology
3.1
The Area of Study
3.2
Population of the study
3.3
Sources of Data
3.4
Sampling method
3.5
Research Instrumentation
3.6
Validity and Reliability of Research Instrument
3.7
Method of Investigation
3.8
Research Questionnaire
CHAPTER FOUR:
3.9
Presentation of Data and Analysis of Data
3.10
Presentation and Analysis of Data
3.11
Test of Hypothesis
CHAPTER FIVE:
4.0
Summary of Finding, Conclusion and Recommendations
4.1
Summary of Finding
4.2
Conclusion
4.3
Recommendation
4.4
Bibliography
4.5
Appendix
CHAPTER ONE
1.0
BACK GROUND OF THE STUDY
The successive
development plans of Nigeria have laid emphasis on the attainment of self
reliance. The need for this national objective is because much is from
individuals from the view point of providing employment opportunities, self
reliance in basic food and material production, high personal income, foreign
exchange earnings and the production of industrial raw materials
In 1971, the government of the east central state statutorily established on
office which was lither to a sub-system of the ministry of commerce and
industry to be known as “fund for small scale industry (FUSSI) to give credit
to prospector investors to enable them establish.
Many Financial Institutions are involved in small scale business development in
Nigeria. Their main functions are to provide funding relief from Financial
consequences of uncertainty and advisory services for business enterprises,
public and private. Some of the Institutions include: Nigerian Bank for
Commerce and Industry (NBCI), Nigerian Agricultural and Co-operative Bank
(NACB), Nigerian Industrial Development Bank (NIDB), peoples Bank of Nigeria
(PBN), The commercial Bank etc.
However, the major problems encountered here is on the lack of collateral asset
on the granting of loans, high administrative cost of processing small loans,
delay in disbursement of approved fund, distress in the banking sector coupled
with volatile exchange rate regime and prohibitive interest rate.
The Institutions also gives assistance to Indigenous businessmen in form of
loans and equity to acquire the ownership interest of aliens in business
activities. They equally assist businessmen by providing consultancy services.
With all these, no doubt this will help to revitalize the ailing economy
STATEMENT
OF THE PROBLEM
Small scale business
have been acclaimed as the engine of growth for most economics. This is because
of their inherent ability to offer an excellent breeding ground for
entrepreneurial and managerial talents as well as developing a pool of skilled
and semi skilled workers. There are three types of credits that are usually
required here:
(i) Short –term
credit (ii) Long-term loan (iii) Medium-term loan
However, most problems and challenges encountered to SMEs are: lack of
collateral assets on granting of the loans, high administrative costs of
processing small loan, delay on disbursement of approved fund, distress in
banking sector coupled with volatile exchange rate regime and prohibitive
interest rate. It is therefore necessary for all to put heads together to form
a meaningful policy that will stimulate a positive take off of our small scale
industrial sector.
1.2
OBJECTIVES OF THE STUDY
The primary
objectives of this study is to find out how union Bank of Nigeria PLC Enugu
branch finance small scale Business unit.
Specific objectives of the study are as follows:
(1)
To ascertain the extent to which the union bank has helped to finance small
scale business and problems rendering such
(2)
To determine the causes variability in small scale business financing by Union
Bank
(3)
To find out the problems encountered by small scale business in obtaining
finance Union Bank
(4)
To evaluate various measure introduce to boast industrial production and its
financing and how this has effected the realization of the set goals
1.3
RESEARCH QUESTIONS
The following
Research question will guide this study.
(1)
How can loan given to small scale business been utilized towards their project?
(2)
In what ways does Union Bank carry there feasibility study of the proposed
project before granting loan?
(3)
What are the requirements needed from small scale business in order to obtain
loans requested?
(4)
If small scale borrowers are required providing a security what types of
security is needed?
1.4
SCOPE OF THE STUDY
This work is to
determine how Bank finance small scale Business unit. The study focused
attention on how small scale business obtain loans from Union Bank of Nigeria
Limited to attain the needed weight and capacity. The study covers small scale
business in Enugu. Small scale businesses used in this study are those
indigenously owned fully by Nigeria and with annual turnover not exceeding five
hundred thousand (N500, 000).
In this regard I can easily identify time and transport constraints as a
limiting factors.
1.5
SIGNIFICANCE OF THE STUDY
Significant of this
study are categories into two:
(1)
Practical Significant
(2)
Academic Significant
PRACTICAL
SIGNIFICANCE
This work will be beneficial to government and individuals who may wish to go
into banking business knowing and taking collective measure in commercial bank
business.
It is also useful to the researcher for it will broaden her knowledge and
experiences, coupled with the advantage of getting connection with various
people who are professionals in their fields.
ACADEMIC SIGNIFICANCE
It
will be beneficial to students because it will help them to know the important
of the study and also to determine the usefulness of the study in their
academic. It is also useful for graduates who have not gotten employment to
find something doing for them self. It will also be of immense benefits to
students conducting similar research work on the same topic or ones related to
it.
1.6
DEFINITION OF TERMS
Bank:
This is a monetary Institution owned by other government or private businessmen
for the purpose of profit making.
Business:
This is an organization consisting a
person or a group of persons who produce and distribute goods and services for
private profit.
Credit:
This
is the money that Bank gives out ad loans and advances with a future date of
repayment.
Finance:
This
is the amount of resource in cash or in kind which the owners of the business
are prepared to put into the business
Long-term
Loan: This is a types of loan used to
financial fixed investment such as factories machines, land etc. This loan
covers over five years
Medium-
term loan: This type of loan
is for more than one year maturity period but not exceeding three to five years
Short-term
loan: This is the types of credit used to
finance yearly operation unit products proceeds. They are mostly for beginners.
Small
Scale Business: This
means those enterprises with total assets in capital equipment plant and
working capital not exceeding N500.000 and employing not more than 50 full time
workers.
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