CROWDFUNDING AS THE NEW HOPE FOR FINANCING SMALL BUSINESS ENTREPRENEURSHIP IN NIGERIA

Abstract

Among the major challenges to growth and development of small business entrepreneurship in Nigeria is access to capital. Small business entrepreneurship mainly sources its funds from personal savings, borrowing from conventional and development banks and government support. However, due to stringent conditions on collateral and high interest involved, most small business entrepreneurs are discouraged from assessing loan facilities from banks. Hence, to overcome these challenges, entrepreneurs now turn to what fintechs call crowd-funding alternative for equity and debts financing for both nascent and existing entrepreneurs. It is imperative for entrepreneurs to be aware and knowledgeable about the existence of crowd-funding as alternative means of financing. Therefore, the aim of this study is to create awareness, understanding and interest among entrepreneurs in Nigeria through literature reviews by focusing on how the study will fit into the crowd-funding context. From the literature review, the study identified six crowd-funding models which include: equity, lending, reward, hybrid, royalty, and donation based. The paper concludes that, hopefully, this will solve some parts of financial needs of entrepreneurs in Nigeria and should be considered as an innovative idea for sourcing finance.