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PROJECT TOPIC: THE PROBLEM FACING SMALL AND MEDIUM SCALE ENTERPRISES IN OBTAINING BANK LOANS

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF STUDY

            The issue of financing small and medium scale enterprises has been the center piece of discussions between the government and banks.  While banks want to lend profitably government think they could sacrifice part of their huge profits without necessarily asking for collateral.

            In this research work therefore, efforts were made to unravel the problems or difficulties being encountered by small and medium scale enterprises before they could secure commercial bank loans and other incentives.  It also takes us to the contributions of small and medium scale enterprises to the development of our economy, its shortcomings and areas where their promoters are found wanting.  We will also attempt to distinguish small and medium scale industries from the big conglomerates and yard stick for distinguishing them stressed.

            The small and medium scale enterprises sub-sector is of immense benefit to any nation’s economic development but unfortunately; minimal attention is paid to them in our country.  For one thing they are major employers of labour because their operation is labour in contradistinctuctive with the larger conglomerates, which aim to automatic, and computerization.

            Modern economists have tagged small and medium scale enterprises industries as a necessary spring board for rapid industrialization of any action.

            Government policies blue-prints as formulated in their yearly budgets as it affects bank’s contribution to small and medium scale enterprises have often generated much controversy among the bankers and other financial institutions and have in most cases been thrown overboard by these groups.

            According the growth and success of such business have always been hampered by under-capitalization, poor management and more importantly bank’s refusal and unwillingness to contribute positively to them even when the federal government has fixed the percentage of their yearly contribution to the sub-sector.


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