While it is generally accepted that small-scale industries have a very vital role in the economic and industrial development of any nation, yet the financing of these industries especially in a developing country like Nigeria; and a newly created Bauchi State in particular, has always been difficult. The objective of this study is to investigate the various sources of finance for these industries, and the specific objective is analyse the roles played by institutional sources and pinpoint problems associated with them. In this study the importance of small-scale industries have been discussed. But particular attention is given to industries in Bauchi State, where various facets of their operations such as types of ownership, nature of business, sources of finance, market, current problems facing them and a host of other issues have been fully diagbnised through a questionnaire analysis. The inherent problems associated with these industries are small-amount of capital, poor management and inability to present viable projects to financial institutions for assistance. On the basis of the above factors a conclusion that, the small-scale industries not only lacked sufficient access to institutional finance but also lacked prudence in the iii application of their scarce resources. Finally suggestions were made aimed at solving these problems.