The Role of Commercial Banks in Financing SMEs in Nigeria

1.0 Introduction
1.1 Background Of The Study
Small medium enterprises (SMEs) are considered the backbone of economic growth in all countries. They play an important role in Nigerians economic growth, as they constitute 97.2% of the companies in Nigeria .They also contribute to national development by positively influencing the distribution of income in both functional and nominal terms. In emphasizing the importance of SMEs ,Rogers,2014, stated; they enhance capacity building as they serve as entrepreneurial training avenues ; they create more employment opportunities; per unit of investment because of their labour intensive operations; they achieve a much more relative high value added operations because they are propelled by basic economic activities that depend mostly on locally sourced raw materials; they provide feeder industry services as they serve as major suppliers of intermediate goods and components to large-scale industries as well as major agents for the distribution of final products of such industries; they provide opportunities for the development local skill and technology acquisition through adaptation. Despite the catalytic role of SMEs in the economic emancipation of countries, some of their major operational challenges in Nigeria include financial problems. About 80% of small and medium enterprises are stifled because of poor financing. The research intends to appraise the impact of commercial banks in the financing of SMEs in Nigeria, with a case study of first bank plc.

1.2 Statement Of The Problem
Despite the significant role of SMES,they are largely affected by lack and insufficiency of funds to operate and expand their businesses. In view of this commercial banks in Nigeria play financial roles towardsmeeting the capital and operational funds required by SMES

1.3 Research Questions
What is the nature and roles of SMEs?
What is the nature of the financing problem of SMEs?
What is The Role of Commercial Banks in Financing SMEs in Nigeria?
What constitute the financing options of first bank to SMEs in Nigeria?

1.4 Objective Of The Study
a) To appraise the nature and roles of SMEs in Nigeria
b) To determine The Role of Commercial Banks in Financing SMEs in Nigeria
c) To appraise the role of first bank in financing SMEs in Nigeria

1.5 Significance Of The Study
The study shall highlight the significance of SMEs to the economy The study shall analyze the roles of commercial banks in financing SMEs in Nigeria The study shall provide financing options offered by first bank plc to SMEs in Nigeria. The study shall serve as a veritable source of information to managers and consultants

1.6 Statement Of Hypothesis
H0: SMEs is not significant to the economy
H1: SMEs is significant to the economy
H0: The financial challenge in SMEs is high
H1: The financial challenge in SMEs is low
H0: The impact of first bank in financing SMEs is low
H1: The impact of first bank in financing SMEs is high

1.7 Scope Of The Study
The research shall appraise The Role of Commercial Banks in Financing SMEs in Nigeria. It shall elucidate the nature and significance of SMEs as well as analyze the financing challenges of SMEs in Nigeria.

1.8 Definition Of Terms
SME:In Nigeria, the small and medium industries Enterprises investment scheme (SMIEIS) defines SMEs as any enterprise with a maximum asset base of N200 million excluding land and working capital and with a number of staff employed not less than 10 or more than 300.The federal ministry of commerce defines SMEs as firms with a total investment (excluding cost of land but including capital) of up to N750,000, and paid employment of up to fifty person, employee relationship, labour intensive operation, simple technology,fusion of ownership and management and limited access to capital.