Barriers to Accessing Financial Institutions Funding for Nigerian SMEs

Small businesses are recognized worldwide as a catalyst of socioeconomic development. Like all developed and developing countries, due to the economic importance of SMEs, the federal government of Nigeria is developing policies and strategies to diversify its economy from total dependence on oil. Part of the economic development diversification effort by the federal government of Nigeria is to develop entrepreneurship and small businesses. The most crucial aspect of SMEs in Nigeria is their contribution to employing most citizens. Despite the importance of socio-economic development, most SMEs fail within the first five years. Many challenges are facing SMEs in Nigeria, which resulted in their failure. Although financial resources have been a critical success factor for SMEs, they find it difficult to access financial institutions funding to finance innovation and business opportunities to ignite success and growth. The mixed research method revealed four barriers to accessing financial institution funding for Nigerian SMEs: inadequate access to financial institutions; inadequate education, skills, and experience of owners/managers; exorbitant interest rates; and gender discrimination. The study made seven recommendations for removing the barriers which might spur financial institutions' funding of SMEs in Nigeria