“Banks only lend money to those who don’t need it.” Discuss how this old saying might...

“Banks only lend money to those who don’t need it.” Discuss how this old saying might apply to start-up entrepreneurs.

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Considering the old saying, we saw above that it is being said that banks only lend money to those who don't need it.

Usually it is being seen that the people belonging from poor families who are in more more need of money are not easily guaranteed the loan from a bank. As the bank demands any sort of asset as a guarantee to grant loans and the poor people usually cannot afford because they do no have that much capital with them. Hence the banks do not lend them money. And in contrast people who are well good, wants money for their business are easily granted as they have passed all obligations kept forth to get loans.

So this proves that banks are lending money to the one who are in not much crisis of money.

If we relate this to start up entrepreneurs, we know that starting any business or any type of start up requires huge capital in the starting. And for this businesses need to borrow money. The business which are having its branches well developed, they can easily arrange money by even selling their shares and other modes of raising capitals. Evens banks easily allot them loans seeing their background and they can start their business without any difficulties.

Whereas if we talk about start ups that are new, they are in require of huge amount. But they usually face problem in raising capital for their business. This is because lending this much huge money fir business, banks are nit sure whether they should lend money or not. They feel risk that of the business would suffer loss then their money could be at risk. Hence such start ups face problem whole arranging funds.

And just because of this, many entrepreneurs are not able to perform well, and many even do not enter into entrepreneurship just because of this factor.

Well, to eradicate this, recently government has taken steps to provide specials loans to those who want to start their business and starting special schemes for this.

This this problem has been seen to be reduced in the near future.

So, here we saw why it's being said that banks lend money to those who are in no need of this.

ekkarill92 answered 1 year ago

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