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This project understudy is concerned with the problems, prospects as well and the sources of finance available to small-scale business. The main purpose of this study is to identify the various sources of finance available the prospects and difficulties experienced by small-scale business in Nigeria, and hence advance some feasible solutions to them. Small scale business financing in Edo State and in particular has been problematic as a result of some factors. While officials of the financial institutions have always expressed preparedness to assist these enterprise on their part have continually accused away financial institution of shying away from the responsibility of financing small scale business in Nigeria. Perhaps this research attempts to reconcile these divergent views using Sonic Paint Ltd, Benin City as an example, with an intended population of sixty (60), adopting the use of questionnaires and direct interviews as a means of data collection and subsequent analyzing the data using chi-square. It is found that small-scale business does not receive financial assistance from financial institution and lack of awareness of firms and sources of credit and finance constitute problem in securing credit. Conclusively, the underdeveloped nature of the economy can be said to be significant affected the case of obtaining credits. Finally the fact is that both the private sector and public sectors has a poor financial awareness



  • Background to the Study

The opportunities to achieve wealth and personal gratification through small-scale business have come to occupy an important economic and cultural role in our society. Little or know attention has been given to the development of small-scale business in Nigeria. Member of new business are starting each day in Nigeria. But few eventually succeed. However, this project work is mainly concern with the problems and prospects of financing small-scale business in Nigeria.

It is therefore important here to discuss some of the financial problems the investors come across some of the financial problems the investors encounter in trying to set-up a small-scale business. According to Koller (1975), he said that before commencing a business, the new business, and producer should be aware of the need for finance (this cover manufacturing, production and the provision of goods and services).

Generally, small-scale business in Nigeria  involves considerable risk  of one kind or another. This simply means that even if the finance has set-up, it is not always certain that the business will be successful. The proceeding chapters of this project will highlight some of the main problems of financing small-scale business in Nigeria and the possible solutions to them.


1.2     Statement of Problem

Take a careful look at the establishment of small-scale business in Nigeria; particularly the rural areas have suggested that there are problems and prospects in the small-scale business.  The rate of failure has indicated that such an undertaken may be extremely hazardous and unrewarding. However, the need to develop small-scale business sectors has been recognized.

This problems is based on the  role small-scale business has to play in the development of the nation. The economic situation in Nigeria, (which is not very stable) low income per capital limits the savings. However, the fact remains that low capitalization can not easily be completely eliminated.

Basely of this, government has introduced many measures of improving the operation of small-scale business in Nigeria. The effectiveness of these measures can not be ascertained easily because of the numbers of organizational problems of the concept of “small-scale business in Nigeria”.

This study has been set-up to examine some of the problems and prospects of financing small-scale business, to enable them eliminate some of these problems facing the public and the government as a whole in order for them to achieve their goals.

  • Research Questions
  1. Are there low levels of financing small-scale business in Nigeria?
  2. Are small-scale business operated without adequate management skill?
  3. Do small-scale business receive financial assistance from financial institution?
  4. Is profit maximization taken as a primary objective in small-scale business?
  5. Are lack of awareness of the form and sources of credit and finance in securing credit?
    • Objectives of the Study

 It is the purpose of this study to enumerate the various sources of finance available to small-scale business firms, in the characteristics and problems associated with these sources in Sonic Paint Ltd., Benin City the root causes of these problems were ascertained are possible solutions were suggested as well as offering strategic mean of ensuring efficient utilization of these resources in the prevailing economic circumstances.

Specifically, the purpose of this study comprises of

  1. Identification and analysis of the various sources available for obtaining start up as well as expansion funds.
  2. The examination of the characteristics and problems associated with these sources.
  3. Making and findings, analysis feasible recommendation for government investments and the financial policies of small-scale business in Nigeria.
  4. To examine the way and manner in which working capital funds are raised and managed for the operation of the enterprise.

1.5   Statement Hypothesis

The following hypothesis were formulated as a guide to carry out this study:

  1. Small-scale business does not receive adequate financial assistance, form financial institutions.
  2. That lack of awareness of the forms and sources of credit and finance constitute problem in securing credit.
  3. Government aids grant to small scale business are not adequately granted to them
  4. Lack of collateral securities has slow down the lending ability of financial agencies towards small-scale investors.
  5. Problems of capital has slow down small-scale business development in Nigeria.

Opposite of the hypothesis were also formulated as a guide:

  1. Small-scale business receives adequate financial assistance from financial institutions.
  2. That lack of awareness of the forms and sources of credit and finance do not constitute problems in securing credit.
  3. That lack of adequate collateral securities had not slowed down the lending abilities of financial agencies towards small scale investor.
  4. That even when government grant aids inform of loan credit to small-scale investors.
  5. Problems of inadequate financing had not showed down the pace of small-scale business in Nigeria.

1.6     Significance of the Study

At this time of the nation, questions for economic recovery and self-reliance, the role of small-scale business in this regard can not be overemphasized. There is no doubt that the result of this research will be useful to prospective and existing small-scale firms in Nigeria by equipping them survival strategies in a period of economic hardship.

Specially, both public and private sector hopefully find this work useful in all areas of financial management.  Moreover, potential investors and other individual wishing to establish small-scale business will also see this work as a useful guide.

Furthermore, the study shall be beneficial to the commercial banks and other financial institution as a reference frame in the formulation of credit policy guide-lines towards the financing of small-scale business. Commercial bank and government will also benefit from this work since it will help them to review their existing criteria for granting loan.

Finally, if they are properly applied, small-scale investors would have a significant step towards self-reliance in industrial drive.

  • Scope of the Study

This study cover mainly small-scale business owned and operated by a single owner who employs staffs to carryout routine operations of the enterprise.

Geographical and Time Scope

This restricted to Benin City, Sonic Point Limited, and its staff in Benin City other staff of Sonic Paints not resident in Benin City will not be of the study. Efforts will be made to also emphasize on, social responsibility activities of Benin Sonic paint industries only. Its take threats (3) weeks to get the true information.

Some of the aspects to be examined in this forms are as following:

  1. Formulation of small-scale business
  2. Aims and objectives
  3. Sources of finance ie money
  4. Problems of financing small-scale business
  5. Advantages derived from small-scale business

1.8     Limitations of the Study

Research works are not always problems free each stage the researcher encounter a lot of problems which could be group under financial constraints and the unwillingness of companies to disclose in formations.

  1. Finance: Research works are always finance intensive and this constitute a major problem in carrying-out effective and efficient research. For this reason the job is limited.
  2. Time: Time is another problem of the researcher, because the time short for the completion of the project work was not sufficient. This was done to the facts that with in this short time Limit, others academic work were carried out side by side with the project.
  3. Disclose of Information of the Companies:  Most companies visited for information always feel unwillingly to disclose such information of personnel reason  these companies were not willing to answer some of this questions, its turnover and the overall asset.

Organization of the Study

This study is developed and concluded in five chapters. Chapter one include back ground to the study, statement of the problems research question, hypothesis, purpose of the study, significance of the study, scope of the study, limitation of the study, organization of the study and methodology of the study.

Chapter two reveals the related literature and chapter three focuses on methodology. Chapter four focuses on the data presentation and interpretation while chapter five deals with the summarization of findings of the research, conclusion of the study and findings.

1.9     Definition of Terms

  1. Loan Credit: A sum of money lends to somebody to be repaid with interest.
  2. Scale: A set of numbers or standard for measuring or comparing.
  3. Profit: This is the money gained from trade
  4. Occupation: Business, trade which any human done to either living, it could be permanently or temporally.
  5. Problems: These are difficulties in business that needs attention.
  6. Finance: It is the provision and management of money in a business enterprise.
  7. Capital: money needed to start a business
  8. Bank: This is a place where money are kept for the purpose of transaction.
  9. Asset: The property of a company owned by the company e.g building.
  10. Liabilities: This is the amount of debt, which a business owes e.g loan.
  11. Investment: To put money to a particular business in order to make profit e.g buying of share.
  12. Staff: A groups of employee in a business organization.


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