In: Economics
QUESTION 1 (300-500 WORDS)
“It is learned that banking institutions are too selective in funding entrepreneurs, especially small, medium and micro entrepreneurs. These groups are considered too risky in terms of their loan repayment.”
Based on your study in financial marketing institution, what are alternative institutions or solutions that can be proposed to support those entrepreneurs and how to avoid the risk mentioned? Support your answer with relevant example or current issues. Don’t forget to get attach the reverence/link. ( malaysia and worldwide )
Answer : It is rightly said that banking institutions are too selective to give financial assistance to big business houses and biased towards small and medium enterprises as they are more risky in respect of repayment of loans.
But here are other alternatives which can help them to grow and give financial assistance :
1) Co-lateral loans : Some of banking institutions gives Co-lateral loans against property or gold. This can be best alternative to regular commercial loans and help small and medium enterprises to grow .
2) Co-operative Societies : This societies are made by some group of people who owned small and medium enterprises. All pool small part of savings and run like co operative banks which also can be best source of financial assistance for these kinds of enterprises.
3) Trader Credit : This is also regular basis credit system can be facilitated by trader for short term and after sales one can repay . Hence it can also be source of credit.
4) Government sponsored finance : This facility is provided by government in order to promote growth and development for small and medium enterprises hence one can avail financial assistance at cheap interest rates.
Keep studying well bright students and Kindly rate my answer please ???