Challenges of Bank Credit among Small and Medium Enterprises (SMEs) in Nigeria

Abstract

The survey research design was adopted, and the study was specifically designed to evaluate the challenges of bank-credit among SMEs in Nigeria and make recommendations. Both the questionnaire and personal interview methods were used to generate data. Data generated were coded and analyzed through tables, frequencies, percentages and Z-Test statistical technique. Bank credit refers to loans, advances and discounts (LAD) extended to borrowers for productive ventures. Nigerian Banks are still very slow in lending to SMEs. They believe that SMEs are usually not properly organized and therefore consider lending to the sector highly risky. Where they must lend, they insist on stringent loan processes including the provision of adequate collateral. These stringent loan processes frequently cut off many SMEs from having access to bank credit, and to check insider fraud, banks have placed embargo on lending without collateral. The study found that SMEs do not  have significant access to bank credit in Nigeria. Ten recommendations were made based on the result of the study.

Keywords: bank credit, SMEs, NBCI, NACB, indigenization policy, NIDB, Collateral, MSMEs, SMECGS, MfBs, Liquidity, NASME, LAD, Embargo, CBN.