Question

How is finance a problem for small business?

• A. Many units lack the credit worthiness required to raise as capital from the capital markets and thus, depend on exploitative local financial resources
• B. The units frequently suffer from lack of adequate working capital, either due to delayed payment of dues or locking up of capital in unsold stocks.
• C. Banks do not lend money without adequate collateral, guarantees or margin money, which they are not in a position to provide
• D. All of the above

Answer 1

Answer: (D)

All of the above

Finance plays a major role in the working of any enterprise or industry as it is known as the “Lifeblood” of a business organisation. There are various problems that are faced by a small business while arranging the sources of funds that help in the establishment and working of small business. The major problems that are a small business face with respect to the arrangement and procurement of funds are:-

1. Many banks don’t provide loans to small businesses without any collateral security and guarantee.

2. Small business suffers from lack of working capital which is required to meet the day-to-day expenses of the business this is because they get delayed payments or their stock is not sold in the market.

3. Many financial institutions don’t have trust in the people running a small business as they don’t have a credit worthiness that is required to generate funds for the business.

Thus all of the above options are correct.