Strategies to Minimize Profit Loss From Small Business Enterprise Credit Rejections

Strategies to Minimize Profit Loss From Small Business Enterprise Credit Rejections by Alfred Nwagbo CPA, Institute of Certified Public Accountant of Nigeria, 2004 MAHS, St. Edward’s University, 1988 BBA, Texas State University, 1983 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University October 2018 Abstract Institutional policies and the terms and conditions of credit allocation complicate the demand and supply of small business enterprise (SBE) credit, causing lost profits. Bank leaders are losing 28% of profitable projects because of the high rejection rate of credit applications for SBE loans. The purpose of this multiple case study was to explore strategies Southeastern Nigerian state bank leaders use to minimize lost profit from SBEInstitutional policies and the terms and conditions of credit allocation complicate the demand and supply of small business enterprise (SBE) credit, causing lost profits. Bank leaders are losing 28% of profitable projects because of the high rejection rate of credit applications for SBE loans. The purpose of this multiple case study was to explore strategies Southeastern Nigerian state bank leaders use to minimize lost profit from SBE credit rejections. The conceptual framework that grounded this study was credit rationing focused on the lender–borrower relationship. Data collection involved reviews of company documents and face-to-face semistructured interviews of 6 participants from 3 banks in Southeastern Nigerian state. Based on the Schorr’s modified data analysis approach, 5 themes emerged (a) credit rationing depends on sufficient information, (b) business accounts statements are a fall back for credit availability, (c) character may be more important than collateral, (d) government policies are challenges to the formal banking system, (e) profits may be a hedge for high interest rates. Findings may be used to enhance the profitability of banks in the Southeastern Nigerian state. Implications for positive social change may include the support of community projects for individuals living at or below the poverty level in region. Strategies to Minimize Profit Loss From Small Business Enterprise Credit Rejections by Alfred Nwagbo CPA, Institute of Certified Public Accountants of Nigeria, 2004 MAHS, St. Edward’s University, 1988 BBA, Texas State University, 1983 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University October 2018 Dedication I dedicate this dissertation first to God Almighty for His grace, then my family. A profound gratitude to Alfred Jr., Princess K. , Master Praise, Ugo, and Mommy Dear who contributed in various ways to nudge me forward. I am thankful for your support morally and individually throughout the doctoral journey. I dedicate this work specially to my grandchildren, Ashy and the others, for the smiles of innocence with symbolic rewards or intent that invigorated me. I give special thanks to my late parents for their sacrifice to make me the person I am today, and my late cousin “Dagogo. ” Your departure was painfully too soon, but your expectation was both an encouragement and inspiration for fulfillment. Acknowledgments I want to thank my chairperson, Dr. Charles Robert Needham in a special way, for his extrinsic and intrinsic guidance, mentorship, patience, support, and motivation through this final process. In addition, my gratitude to my committee member, Dr. Peter Anthony for the one-on-one redirection toward success, and the university research reviewer, Dr. Deborah Nattress for the blessing of changes made during the study. The discharge of your different roles helped to sharpen my skills as a researcher and enabled me to develop a qualitative doctoral study. Further, I like to thank Dr. Susan Davis, program director, and Dr. Fred Walker, doctoral study administrator, for their pragmatic leadership in the Doctor of Business Administration program. Your excellent guidance has significantly contributed to my success.