Analysis Of The Adequacy Of Bank Financing On The Growth Of Small Businesses

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
For both developing and developed countries, small and medium scale firms play important roles in the process of industrialization and economic growth. Apart from increasing per capital income and input, SMEs create employment opportunities, enhance regional economic balance through industrial dispersal and generally promote effective resources utilization considered critical to engineering economic and growth.
However, the seminal role played by SMEs not withstanding its development in every where constrained by inadequate finding and poor management. The unfavourable macroeconomic environment has also been identified as one of the major constraints which most times encourage financial institutions to be risk-averse in finding small and medium scale businesses.
Okporobie (1989:10) observes that Nigeria small scale industries continued to decline despite the so called priority given to the sector.
Ekeyong and Nyong (1992) observed that scale small enterprises are regarded as an organic part of a viable structure for the attainment meaningful economy development in developing economic like Nigeria.
Osayameli (1989) observes that the strength that make small scale enterprises more amendable for assistance areas e.g. low initialcapital out lay requirement and easy entry and exist.
1.2 STATEMENT OF THE PROBLEMS
The problem of credit to small scale industries may not necessarily be as a result of financing insufficiency but rather for some other reasons among which are:
1. Insufficient preparation on the part of small scale entrepreneurs in their request for credit assistance.
2. Information gaps as to range of finding institutions and scope of service available in these institutions.
3. Unfavourable bank loan policies and conditions that affect or hinders small business.
4. Inadequacy of bank financing small business.
However, the practitioners in the sector small scale industry do not display competence in preparing justification for their project. It is to see most of them coming up with cash flow projections, projected balance sheets, among others. They are based on personnel rudimentary information and speculation. At times, when they outcome that are made figures project based on assumptions which are most of their time unrealistic.

1.3 OBJECTIVES OF THE STUDY
The objectives of the study include:
a. To ascertain the extent to which the Union Bank of Nigeria Plc has helped to finance small scale industries.
b. To identify the problems encountered by small scale industrialists in obtaining finance from Union Bank of Nigeria Plc.
c. To evaluate various measures introduced to boost industrial production and its financing and how this has affected realization of the set goals.
d. To make suggestion and recommendations based on the data generated by the study.

1.4 RESEARCH QUESTIONS
The critical appraisal to give answer to the following questions:
1. To what extent has Union Bank of Nigeria Plc helped to finance small businesses?
2. What are the problems encountered by the small scale industrialists in obtaining finance from Union Bank of Nigeria Plc?
3. What are the various measures introduced to boost industrial production and its financing and how this has affected the realization of the set goals?
4. What are the causes of changes in small scale industrial financing by Union Bank of Nigeria Plc?
5. Does any linear relationship exist between leading to small business and economic recovery?

1.5 RESEARCH HYPOTHESES
Ho1: There is no significance relationship between lending to small business and economy recovery.
Ho2: There is no significance relationship between Union Bank of Nigeria Plc lending to small business.
Ho3: The loan conditions are not tailored to suit the needs of small business.
Ho4: The bank loans are not accessible to small scale business enterprise.

1.6 SIGNIFICANCE OF THE STUDY
This study will highlight problems associated with an analysis of adequacy of bank financing small scale industry in Nigeria. It will give information on the possible area for improvement.
Furthermore, the study will help commercial banks to assess and appraisal their role in financing small scale industry in Nigeria.
Moreover, suggestion and recommendation made in this paper will help policy makers formulate new economic policies maintain or modify the existing one. It will equally serve as a guideline to researchers who may wish to decide with this study in the future. It will also help small scale entrepreneurs to make sufficient preparation in the request for credit assistance.

1.7 SCOPE OF THE STUDY
The scope of the study is an analysis of adequacy of bank financing small scale industries in Nigeria. A case study of Union Bank of Nigeria Plc. It does not cover an analysis of adequacy of bank financing medium and large scale industries.

1.8 LIMITATIONS OF THE STUDY
However, there was constraints imposed on the researcher this includes the following:
a. Time a study of this nature, need a relatively long time during which information for accurate or at least near accurate inference could be drown.
b. Cost: The researcher would extent the survey to areas but limitations here include cost of transportation to source for materials and cost of setting the already completed work.
c. Dearth (scarcity) of statistical data: Lack of statistical data from our financial institutions like Central Bank of Nigeria (CBN), ministry of financial and economic development, commercial and merchant bank posed a constraint.

1.9 DEFINITIONS OF TERMS
This defines the major terms used in the research. These terms includes:
1. Small and Medium Scale Industries (Enterprises) SME: Small and medium scale enterprises are defined as those enterprise with fixed assets other than loan but including the cost of new investment not exceeding N36million.
2. Bank Financing: This is the process of sourcing for fund or acquisition of funds for financial purpose from a bank.
3. Adequacy: Thiscan be defined as the quality of being sufficient, adequate or able to meet the needs.
1.10 HISTORICAL BACKGROUND OF UNION BANK OF NIGERIA PLC
The Union Bank of Nigeria Plc was found in 1917 as colonial bank. In 1925 Barclays bank acquired colonial bank, changing the bank name to Barclays bank (Dominion, Colonial and overseas) or Barclays bank (DCO).
In 1969 Barclays bank (DCO) was incorporated in Nigeria, as Barclays bank of Nigeria Limited to comply with banking laws enacted in 1968. The bank later changed its name to Union Bank of Nigeria Plc, to reflect it new ownership structure.