Small Business Funding and SME Survival Rates in Nigeria: A Quantitative Analysis of Financial Constraints

• Post by: birpo
• February 14, 2026
• Comments off

Ojeh Augustine Ph.D., FCA¹, Onah Kelvin Amobi Ph.D.² , Amaechi Marcellus Chukwu Ph.D. ³  &  Geoffrey Ndubuisi Udefi Ph.D. ⁴

Abstract         

This study investigates the relationship between small business funding and the survival rates of Small and Medium-Sized Enterprises (SMEs) in Lagos State, Nigeria, with particular emphasis on the role of financial constraints. Despite the recognized economic significance of SMEs, persistent funding barriers continue to undermine their operational stability and long-term viability. Anchored in a quantitative research design, the study draws on primary data collected from 300 SME owners through structured questionnaires measuring access to finance, dimensions of financial constraint, and indicators of business survival and performance. Descriptive statistical techniques, including frequencies and percentages, were employed to analyze the data.The findings reveal pervasive limitations in access to external finance: 36% of respondents rated their access to funding as low and 22% as very low, whereas only 16% reported high or very high access. Perceived impact analysis further indicates that funding availability plays a decisive role in enterprise continuity, with 48% of respondents reporting that access to finance exerted a very large or large influence on business survival over the past three years. Major financial constraints identified include difficulty in accessing bank loans (30%), high interest rates (24%), inconsistent cash flow (20%), and insufficient collateral (16%). Notably, 58% of respondents stated that these constraints hindered business growth significantly or very significantly. Moreover, expectations regarding improved financial access were strongly positive. Approximately 64% of respondents indicated that enhanced funding would make long-term survival very likely or likely, while 60% reported that it would have a very large or large effect on performance indicators such as sales growth, expansion capacity, and productivity. Therefore, the results underscore the centrality of financial access to SME sustainability and resilience. The study provides empirical evidence that reducing financial constraints through improved credit mechanisms, supportive lending policies, and strengthened financial intermediation could significantly enhance SME survival prospects and contribute to broader economic development in Nigeria

Keywords: Small Business Funding, SMEs Survival Rates, Access to Funding, Financial Constraints, Business Growth.