IMPACT OF CREDIT FACILITIES ON GROWTH OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA
Abstract
It is common knowledge that small and medium scale enterprises (SME’s) occupy
the largest portion of production or buying and selling in most developed and
developing economies around the world. The study examines the effect of Credit
Facilities on the Growth of Small and Medium Scale Enterprises in Nigeria The
objectives of the study are to examine the effect of bank overdrafts on the
profitability of Smes in Nigeria, effect of trade credit on market share of Smes in
Nigeria and effect of loan on operational performance of Smes in Nigeria. A
descriptive research design was employed, and a target the population of the study
is 100 SMEs operator of the selected location. A sample size of 80 was chosen,
regression statistical analysis was used to test the formulated hypotheses. The
results of the findings indicated there is significant effect of bank overdrafts on the
profitability of Small and Medium Scale Enterprises in Nigeria. This suggests that
access to bank overdraft facilities provides SMEs with the necessary short-term
financing to manage cash flow challenges, invest in operational activities, and seize
immediate business opportunities, thereby enhancing their profitability. Also the
study's findings revealed a significant positive impact of trade credit on the market
share of Small and Medium Scale Enterprises (SMEs) in Nigeria. This suggests that
extending trade credit enables SMEs to attract and retain customers by offering
more flexible payment terms, thereby enhancing their competitiveness and
expanding their market presence. The study recommended that financial
institutions should develop SME-friendly overdraft products with flexible terms
and reduced collateral requirements. This approach can provide SMEs with the
necessary short-term financing to manage cash flow challenges and invest in
operational activities, thereby enhancing their profitability.
Keywords: Credit Financing, Growth, Credit Facility, Bank Overdraft, SME
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