THE IMPACT OF BANK LOANS ON SMEs IN NIGERIA
ABSTRACT
Small and Medium enterprises are the catalyst for economic growth in most economies thus, the fundamental objective of this study is to investigate the impact of loans on Small and Medium Enterprises (SMEs) in Nigeria. So that the ability of SMEs to develop positively and drive economic growth in the Nigeria will become real. Simple random sampling technique was employed in selecting the 100 SMEs that constituted the sample size of the research. Structured questionnaire was designed to facilitate the acquisition of relevant data which was used for analysis. Descriptive statistics which involves simple
percentage graphical charts and illustrations was tactically applied in data presentations and analysis. The findings of
the study reveal that significant number of the SMEs benefitted from the loans even though only few of them were
capable enough to secure the required amount needed. Interestingly, majority of the SMEs acknowledge positive
contributions of loans towards increasing their returns and sales thus placing them in the competitive arena. It is
recommended that Banks should review their interest rate downwards and also share best practices with their SME
customers especially on the efficient use of loans; this will boost their productivity and support SMEs in Nigeria.
CHAPTER ONE
INTRODUCTION
1.1 Introduction and Background
In Nigeria, available data from the Registrar General Department indicates that 90% of companies registered are
micro, small and medium enterprises (Mensah, 2004). This target group has been identified as the catalyst for
economic growth of the country as they are a major source of income and employment to many Nigeriaians.
According to Mensah (2004) Small enterprises employ between 6 and 29 employees with fixed assets of $100
Thousand with Medium enterprises employing between 30 and 99 employees with fixed assets of up to $1 Million,
Hallberg (2001) put forward that SMEs account for majority of firms in an economy and a significant share of
employment. Like other countries of the world, SMEs in Nigeria have the tendency to serve as sources of livelihood to
the poor, create employment opportunities, generate income and contribute immensely to economic growth. Small
firms are the engines for economic development of several developed countries such as the US and Japan (Hallberg, 2001).
THE IMPACT OF BANK LOANS ON SMEs IN NIGERIA