Debt Finance in US of Small Companies
Why It CAN Be Difficult For Small Companies to Raise Debt Finance in US
- Lack of safety
- avoidances of finances available
- Most of them are dangerous businesses like there is no feasibility studies done as chances of failure have been place to 80%.
- Their size being small tends to create them UNKNOWN that is they are not a important competitor to the big companies.
- Cost of finance may be high - their market share may not permit them to safe debt.
- Small loans are expensive to extend via bank via administration costs are very high.
- Lack of business principles such is sound and not easy in evaluating their presentation.
Solutions to the Above Problems
- There should be diversification of securities as an example of to accept guarantees.
- Education of those businessmen on sound business principles.
- The government must set up a special fund to assist the jua kali businessmen.
- Encourage configuration of co-operative societies.
- To ask for bankers to follow up the need of these loans.