Abstract:
For an adequate discussion ot the issue involved in financing small and medium
scale industries bythe commercial banks. it is pertinent to review what essentially
constitutes small and medium scale industries. Often there is no single criteria for
classification of a business unit as a small or medium scale. The classification
varies according to time and setting. For instance, the Central Bank of Nigeria
defines small scale enterprises for monetary policy purposes in terms of the annual
turnover which is not more than Five Hundred Thousand Naira ($00,000.00) while in
some countries it is classified bytaking the'number of employees as ayardstick.
Financing of small and medium scale enterprises is a problem which
concerns not onlythe small scale industrialists but also the government. The study
lntunds to evaluate the performance of coriirnurciol banks in financing the small and
medium scale industries with a viewto identifying some ofthe faCtors that hinders the
banks from granting loans to them.
The studytries to verify whether the problem lies with the demand of the fund
iu with tluv nut-lily lt utttltjllt thn lt'n'dtllt- lni tliu lttltrtfttttll nl wrnu luau nppluntnuna.
as well as which of the sub-groups benefited more. The effect of the government
supportive program on the commercial banks attitude to lending to the sub sector
and their compliance to CBN's guidelines were verified.
Research study shows that even where government istproviding financial
incentives for small business lending, some banks still maintain avery conservative
attitude tint-raids small scalu enterprises Sometimes they demand collateralsmost ol these small and medium scale industries could not afford, This is not
surprising since commercial bani are more concerned with the safety ol theii Iunds
than in the development olthe small and medium scale sector.
