FINANCING WORKING CAPITAL INVESTMENT AMONG SMALL BUSINESSES IN KANO

AMINU, Rabiu
Department of Accounting, Bayero University Kano
aminurabiu212@gmail.com
SADIQ, Rabiu Abdullahi
Department of Accounting, Bayero University Kano
assadiqu2000@yahoo.com
ABSTRACT
This study examined financing working capital investment among small businesses in Kano using a
quantitative and qualitative approach. The study used descriptive statistics to analyse data; and found
that small firms mostly rely on internal sources (retained profit, early settlement discount, and delayed
payment to suppliers) of finance as compared to external sources (bank loan and equity). In other cases,
they rely on informal sources (private, family, friend, money counting/lenders, funds/wealthy families,
rotating savings and credit associations) to finance their working capital investment requirements.
These results revealed that firms experience significant information costs that prevent them from having
access to traditional sources of financing. The findings of the study will be useful to the SMEs owners,
financial institutions that fund SMEs and can help the policymakers to formulate strategies and
programs that will support SMEs at different stages of the financial chain as well as financial researchers
in Kano state Nigeria.
Keywords: Working capital financing, small business, pecking order theory, ownership structure