debt finance in us of small companieswhy it can

Question

Debt Finance in US of Small Companies

Why It CAN Be Difficult For Small Companies to Raise Debt Finance in US

1. Lack of safety
2. avoidances of finances available
3. Most of them are dangerous businesses like there is no feasibility studies done as chances of failure have been place to 80%.
4. Their size being small tends to create them UNKNOWN that is they are not a important competitor to the big companies.
5. Cost of finance may be high - their market share may not permit them to safe debt.
6. Small loans are expensive to extend via bank via administration costs are very high.
7. Lack of business principles such is sound and not easy in evaluating their presentation.

Solutions to the Above Problems

 

1. There should be diversification of securities as an example of to accept guarantees.
2. Education of those businessmen on sound business principles.
3. The government must set up a special fund to assist the jua kali businessmen.
4. Encourage configuration of co-operative societies.
5. To ask for bankers to follow up the need of these loans.