Financing Options for Small and Medium Scale Enterprises in Nigeria

Government has identified the need for the development of SMEs. One of such Sectoral strategies is the introduction and pursuit of policies such as concessionary financing to encourage and strengthen the growth of SMEs in Nigeria. In this paper, a random sample of formal and informal finance sources and 20 SMEs in 6 selected small and medium industries in Kaduna and Abuja have been studied. We found that financing options for SMEs are numerous but access to these funds has been difficult in spite of government initiatives. SMIEIS fund lacks standard guideline for fund disbursement, the unregulated informal finance institutions finance the SMEs much more than the formal sources and the informal sources make up more than half of the SMEs' mix of funds. It is recommended that the informal source of financing is a potentially important source of micro financing. Savings in them should be further encouraged through regulation, government intervention by way of active participation of community and development banks in local business associations. SMEs should consider all financing options that maximize the value of the business enterprise