Managing Change in Business Financing: A Worrisome Trend for SMEs’ Performance

Abstract

Managing change is a pivotal phenomenon in fostering various sources of business financing to alleviate the worrisome issues often associated with promoting economic development and enhancing SME performance. The study objectives include examining available funding options, the relationship between financing access and business success, and the challenges of securing funds. The study employs a quantitative cross-sectional survey design, utilising two-stage sampling techniques of the clustered and purposive stratified sampling for the selection of three local governments with the highest presence of domiciled SMEs in Lagos State, Nigeria. A questionnaire was administered to a sample of 186 SMEs across the country, based on operational years, relevance, and accessibility. Data were analysed using Pearson's correlation and multiple regression. The study shows that effective management of change in SME financing increases performance, as revealed by results indicating that self-funding is the most commonly used financing option, with other methods showing a positive relationship. Profitability, market share growth, and operational efficiency are indicators of success in creating a user-friendly alternative financing mechanism. At the same time, high interest rates and limited access to information are the primary drivers of challenges for SMEs’ effectiveness.

Implementing funding timeliness and availability to encourage key aspects of business performance, reinforce growth sustainability, and improve funding processes, interest rate percentages, literacy awareness programs, and flexible collateral to lower lenders’ risk perception. Study limitations include sample size, reliance on self-collected data, choice of statistical tools, and the use of a mixed-methods approach, all of which could be improved.