Question

In: Accounting

“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.

Solutions

Expert Solution

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 2 years ago
Next > < Previous

Related Solutions

“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.
NO HANDWRITTEN ANSWERS PLEASE A-Why don’t banks typically lend money to new businesses and if they...
NO HANDWRITTEN ANSWERS PLEASE A-Why don’t banks typically lend money to new businesses and if they do, how do they lend money? B-What are the principles that bankers operate on? C-As a requirement to submit an SBA application, what important factors do lenders take into consideration when reviewing your loan application? D-Describe SBA’s Loans Involving International Trade, and Disaster Loans.
If banks have money to lend out they typically want to lend it to their best...
If banks have money to lend out they typically want to lend it to their best customers. But unfortunately every other bank is trying to do the same thing and this leads each of them to offer the best terms and rates. Unfortunately, once all of the best customers are taken, if banks still have more money to loan out then they will start looking for customers with less-than-stellar credit histories. Still their will be keen competition for their business...
The ability to create money will ---------- as banks lend out --------- money. a. increase, more...
The ability to create money will ---------- as banks lend out --------- money. a. increase, more b. increase, less c. decrease, more d decrease, less
Why do you think banks usually don't lend money to start-ups?
Why do you think banks usually don't lend money to start-ups?
When and how should resources be invested to close gaps between those who do and don’t...
When and how should resources be invested to close gaps between those who do and don’t use the Internet?
Explain how banks create money.
Explain how banks create money.
What is the function of money in the economy? How is it that banks create money?...
What is the function of money in the economy? How is it that banks create money? What is the primary method used by the Federal Reserve to increase/decrease the money supply? How does this method work? How does it relate to the Federal Funds Rate?
Consider the following: 1. Banks that lend money to customers,2. Consumers use credit cards for purchases,3.retired...
Consider the following: 1. Banks that lend money to customers,2. Consumers use credit cards for purchases,3.retired people on fixed incomes,4. college students taking out student loans In the reading it argues that inflation redistributes income,that is not neccessarily fair or equitable Some people and companies are more vulnerable than others. Some people and companies can adjust income to combat higher prices and redistribution. 1.List the four above from least to most vulnerable. 2. In paragraphs 1-4 explain why you ranked...
There is a famous saying “perception is reality.” What does this mean to you? How might...
There is a famous saying “perception is reality.” What does this mean to you? How might our perceptions differ from those of someone with a different cultural background or perspective? Would different perceptions resulting from different prior experiences be a result of bottom-up processing, or a result of top-down processing? Explain why you chose the process that you did. How would acknowledging how people form perceptions and understand how inaccurate they can be, be useful in your future career?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT