9 Benefits And Sources Of Financing Small And Medium Enterprises

Small and medium enterprises (SMEs) are considered the backbone of any nation. They have been responsible for economic growth in various countries around the world. 

They play very important roles in Nigeria’s growth and development also, as they are to be encouraged and constitute up to over 75% of  income sources to the people living in many rural and sub urban areas.

They contribute positively to the development of the country by influencing the distribution  and redistribution of income in both functional and nominal terms at the national level and by extension the whole economy in general. 

The contribution of SMEs to a nation's gross productivity, employment opportunities and other economic development parameters both in developed and developing countries is succinctly summarized as below:

1. Greater utilization of raw materials 

2. Employment generation.

3. Encourages rural development. 

4. Development of entrepreneurship. 

5. Mobilization of local savings.

6. Linkages with bigger industries.

7. Provision of regional balance by spreading investments more evenly.

8. Provision of avenue for self employment.

9.  Provision of opportunities for training managers and semi-skilled workers. 

Thus, the role of SMEs in developing any nation cannot be over emphasized.

Sources of Financing SMEs

Every business organization needs finance and where the finance is inadequate the business development will be slow. Just like big businesses SMEs get their funding from a number of sources.

The major sources of financing SMEs can be classified as debt and equity. 

 

The capital structure of a business firm refers to the composition of long-term sources of funds, viz long-term debt-debenture, preference share and equity shares.

The finance literature recognizes the importance of equity in business operations and sources can be outlined to include: Debt Sources of Finance, Owner’s Capital / Equity Sources of Finance, Funds from 

Specialized Financial Institution and Finance from Venture Capitalist.

  Seven major sources of funding are available to SMEs are:

1. Personal resources.

2. Family and friends.

3. Partners or business associates.

4. Informal financial markets comprising, individuals and group, including pool fund groups  and co-

operative societies.

5. Banks (commercial and merchant). Specialized banks and community banks, Digital Banks Like Fairmoney MFB.

6 Specialized funding facilities e.g. NERFUND, the World Bank Loan Scheme for SMEs

managed by CBN and the African Development Bank (ADB) loan scheme for export

stimulation in the SME sector, SMIEIS etc.

7 Specialized financial institutions such as the Nigerian Bank for commerce and Industry

(NBCI), Nigerian Industrial Development Bank (NIDB) and the Nigerian Agricultural and

co-operative Bank (NACB), NISRAL Microfinance bank.  There are more sources, you can add more below. Stay tuned. Have a lovely day and stay safe.

10 Characteristics Of High Potential Entrepreneurs

 Business is the activity of making one's living or making money by producing or buying and selling goods or services.

 Simply put, it is any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to General Motors. 

 

The term is also often used colloquially (but not by lawyers or public officials) to refer to a company, but this post will not deal with that sense of the word.

 

Below are 10 Listed Characteristics Of High Potential Entrepreneurs

1. They are Creative. Lots of ideas. Thinking “outside the box.” Innovative. Inventing a “third way” when others seem stuck on two undesirable alternatives. Before one can nurture a business to profitability stage you must be creative enough, All the best. 

 

2. Be Determined. Dedicated, persistent. A real “pit bull” who won’t give up even when the going gets tough. Even when you are alone and it’s all on you, you keep plugging away. Determination is also very important in any business one engages into, this will help to go far in business. 

 

3. Be Passionate. Invested. Totally “into” the project with blood, sweat, and tears. This is your baby, I mean the business, your reputation is at stake.  You must also be willingly to accept responsibility, Stay Focused. 

4. Must Be A Risk-taker. This may not be new. Everyone is out there on a limb. No guarantees. Not being reckless or foolish but still reaching out and taking the right risks, Challenge, Make attempts. 

 

5. Be Prayerful. We need to be guided and helped at some moments, every step of the journey.  Pray daily. You can ask your loved ones and friends to pray along. 

 

6. Have Integrity. Totally honest, transparent, above board. No games, no patience with unethical, wrong, cheating, dishonest people and practices.This is very important.

 

7.  Stay Teachable. Always eager to learn something new every day from every possible source: people, reading, competitors. You are a life-long learner. You know you don’t know everything.

 

8. Be A Team-builder. Business is a thing one can’t do all by yourself. One must gather an informal “posse” or “kitchen cabinet” around you. Maybe a partner with or hire quality people with complementary gifts and talents for the business.

 

9. Be A Detail-fanatic. You can’t tolerate sloppiness or careless mistakes or shoddy financial records or less than excellent products and services.

 

10. Be Communicative.  Communication is key. You can engage people with a smile and tell them the honest good news about your business, products, customers, and plans on social media, physically or any means available. One must own up to the truth and be respectful. Have a wonderful weekend, Stay safe.