This research study investigates the problems of financing a small scale business and impact of financial institution on entrepreneurial development of small-scale entrepreneurs that are craving for growth and development in a stiffened economy called Nigeria. The objectives of the study is to ascertain the present economic state of the life’s of entrepreneur in Nigeria and small-scale businesses with the view to identify the major problems that effect the financing of small-scale businesses bearing in mind the adequate financing stands as in energizer to its operations. The research used questionnaire as an instrument of primary data collection. Tables and simple percentages were used in data presentation. For clear analysis, the study centers on two broad variables; the dependent variable which is entrepreneurial development and the independent variable which is micro-financial institutions. Three different hypotheses were formulated and tested, chi-saure test. The study reveals that.

i) There is significant difference in the number of entrepreneurs who use micro-finance institutions and those who do not use them.

ii) There is a significant effect of micro-finance financial institutions activities in predicting entrepreneurial productivity.

iii) That there is no significant effect of micro-finance institutions activities in predicting entrepreneurial development.

Based on these, the study recommends as follows:-

i. The small-scale industries and the financial houses supposed to exist in mutual benefit.

ii. It is the researcher hope that micro-finance institutions in Nigeria will develop more interest in supporting the growth of SMEs.

iii. The financial institution need to put more effort in financing SMEs, their role need to be felt by SMEs, in terms of growth and development.

TABLE OF CONTENTS

Title page - - - - - - - - i

Approval page - - - - - - - - ii

Dedication - - - - - - - - iii

Acknowledgement - - - - - - - iv

Abstract - - - - - - - - - v

Table of contents - - - - - - - vi

CHAPTER ONE: INTRODUCTION

1.1 Background of the study - - - - 1

1.2 Statement of the problem - - - - 3

1.3 Purpose of the study - - - - - 5

1.4 Research question - - - - - - 6

1.5 Hypothesis - - - - - - - 7

1.6 Scope (Delimitation) of the study - - - 8

1.7 Significant of the study - - - - - 9

1.8 Definition of terms - - - - - - 9

CHAPTER TWO: LITERATURE REVIEW

2.0 History of Enugu State - - - - - 11

2.1 Introduction - - - - - - - 12

2.2 Small scale Business defined - - - - 13

2.3 Existing small-scale businesses in Enugu State 17

2.4 Management and organization of small-scale Businesses in Enugu State. - - - - 19

2.5 Problems of small-scale businesses in Enugu State 25

2.6 Benefits of small-scale businesses in Enugu State 29

2.7 Sources of fund to small-scale businesses - 31

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Design of the study - - - - - - 34

3.2 Area of study - - - - - - - 34

3.3 Population of study - - - - - - 35

3.4 Sample and sampling technique - - - 35

3.5 Instrument of data collection - - - - 36

3.6 Validation of instrument - - - - - 38

3.7 Reliability of instrument - - - - - 38

3.8 Method of data collection (administration of instrument) - - - - - - - 39

3.9 Method of data analysis - - - - - 40

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Presentation and analysis of data - - - 41

4.2 Test of hypothesis - - - - - - 50

CHAPTER FIVE: DISCUSSION AND CONCLUSION OF RESULTS

5.1 Discussion of findings - - - - - 61

5.2 Conclusion of the study - - - - - 64

5.3 Recommendation - - - - - - 66

5.4 Implication of the findings - - - - 69

5.5 Suggestion for the further studies - - - 70

5.6 Limitation of the study - - - - - 71

References - - - - - - - 72

Appendix - - - - - - - - 74

Questionnaire - - - - - - - 75

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

It is necessary to stress the point that to succeed in business required some measure of discipline. Most industrialist expect to make a reasonable profit from the investment of time and resources that they have to make in other to bring a project to fruition.

While this may sound simple enough, the border line is the fact in an element wide context, the rate or level of reward that can accrue to various level of effort, discipline and productivity should never be allowed to get out of proportion in relation to effort put in.

Experience has shown that industrial pursuits have been found to yield for the patient and disciplined industrialist rather than stand for business concern with all kinds of effort mostly unproductive and require no legitimate effort to reap profits in multiple fields. After considering the above mentioned statement of facts about industry. The question is how far are we from being industrialized bearing in mind that it yields for disciplined and patient industrialist, all things being equal.

Taking cognizance of the fact that a step forward is the beginning of a mile. Some Nigeria’s business industrial evolution will only start when positive steps are taken towards adequate financing of small-scale businesses. The experience of newly industrialized countries has been an eye opener. Finance is the greatest problem we are likely to face whenever we talk of establishing a small-scale industry.

This is the most important aspect of business enterprises and a lot of controversy surrounding the problem of inadequate finance. A close look on the small-scale industries/businesses all over the country would help to throw further light on the effective of lack of fund on growing businesses. The drastic effect is mostly felt when one tries to study the rate at which our young industries are gradually collapsing. Even the surviving ones are terribly looking for assistance that they are not sure of. Funds are scare, hence the growing industries as regarded in this part of the world as never-do-well especially Nigeria. When an economy is shaky, growing industries in that economy tend to suffer most and usually stand the taste of time. Hence an increase in the number of causalities in this regard.

1.2 STATEMENT OF PROBLEM

There are various problems facing the establishment of small scale businesses like financial limitation, lack of raw material, poor management and quality of the management staff, poor accounting method, high interest charge on loans and lack of adequate planning and feasibility studies.

The most common and problematic issues is funding. Small-scale businesses find it difficult to obtain fund from established institution like commercial banks and because of the some projects have take off but had to be abandoned half way. The issue involved is the question of capital adequacy.

When a company is under capitalized it cannot realize its full potentials. Many small-scale enterprises in Nigeria experience this problem. They cannot expand their scale of production to optimum level.

To improve these problems therefore government should implement the law or policy that made to enhance small-scale businesses, such as central bank policy that direct all commercial bank to give out some percentage of loan to small-scale businesses than those of medium and large scale industries/businesses.

1.3 PURPOSE OF THE STUDY

The purpose of this study includes:

a) To ascertain the present economic state of the life’s of small-scale businesses with the view to identify the major problems that affect the financing of small-scale businesses bearing in mind the adequate financing stands as an energizer to its operations.

b) To determine what strategies employed by the surviving and successful ones among them towards alleviating these problems.

c) To ascertain the extent to which the financial institution has helped to develop small-scale businesses.

d) It will equally serve as spring board or progenitor of further researches in the area of small-scale businesses management. It will lead to more effective business decision making by small-scale business operators/managers.

e) To provide a useful guide for the prospective entrepreneur who may choose self-employment as a career, especially in lines of business.

1.4 RESEARCH QUESTION

This issue will not be treated in isolation taking into cognizance the level of development in Nigeria. Based on this, questions were asked by the researcher, which includes:

1) What number of small-scale businesses have benefited from the commercial house loans and advances?

2) To what extent does small-scale businesses cope with the inadequacy of funds?

3) What are the strategies employed by the surviving and the successful ones?

4) How do small-scale businesses apply for loans from financial institution?

5) What are the role of the government and organizations in finding lasting solution to the problems numberated above?

1.5 HYPOTHESIS

1) Ho: Government monetary and fiscal policies has not effect small-scale entrepreneurs operations.

Hi: Government monetary and fiscal policies do effect small-scale entrepreneurs operations.

2) Ho: The societal status of management staff and personal have not influence the degree of credit mobilization from financial institutions.

Hi: The societal status of management staff and personal have influence the degree of credit mobilization from financial institutions.

3) Ho: Small Scale businesses have not lack adequate funds for the smooth running of the business.

Hi: Small Scale businesses have lack adequate funds for the smooth running of the business.

1.6 SCOPE (DELIMITATION) OF THE STUDY

The area situation would have been the study of all the small scale businesses Nigeria but however, this would have posed some threats to the researcher. Among them were the lack of adequate fund meet the rising cost of research. Unavailability of sufficient books by Nigerian authors in the area of small businesses and its problems. Also the problem associated with the collection of data consequently, the study is especially design to examine the analysis problems of financing small scale business, in Enugu State towards getting financial assistance from financial houses.

1.7 SIGNIFICANCE OF THE STUDY

The significance of this research is that the result will help identify how businesses loan are obtained, or secured both locally and internationally from financial institutions are being used. On this note awareness is being created or it will help to create it on how fund or finance could be raised to finance small scale businesses.

1.8 DEFINITION OF TERMS

PRODUCTION: Any business oriented action that aimed at converting input into output of goods or services.

INVESTMENT: The outlay of money for income or profit the sum invested in business or the property purchased.

CAPITAL: This is the firm’s action plan aimed at achieving its objectives, satisfying the need of the customer and servicing the competition in its environment.

FEASIBILITY STUDY: This is the finding aimed at determining the business profit potential and return on investment.