THE CHALLENGES OF OBTAINING SMALL-BUSINESS LOANS With the financial of the late in a amounts to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
THE CHALLENGES OF OBTAINING SMALL-BUSINESS LOANS With the financial of the late in a amounts to big W 2000s came a three-punch cash flow eased back on elevated credit requirements, "large" small businesses ($10 milmorations or in revenue). Therefore, many startups and small businesses still may be unable to secure a bank loan and will have to continue relying on alternative financing sources." knockout for many small businesses: fall- ing sales, lack of collateral to apply for loans due to plummeting values of commercial and residential real estate, and difficulty finding banks willing to issue small-business loans. Even when the economy began to recover, banks remained cautious and risk-averse, and stricter regulations required them to retain more capital and therefore lend less generously. However, things are looking up for the small-business lending environment. During the recovery from the latest recession, the amount of small-business loan applications approved by large banks grew from 9.7 to and rising property values allowed small- business owners to return to using real estate as collateral. These trends are expected to continue as the economy further rebounds. On the other hand, significant barriers continued to prevent the lending environment from returning to pre-recession levels. Tradi- tionally, small community banks were a large source of small-business loans, but many went out of business with the market crash; now, rather than their numbers rising again, the industry is moving toward increased consolidation in fewer, larger banks. These banks do not make much money on smaller loans (under $1 million) and so focus more on Discussion Questions 1. Why is it important for small businesses to have access to loans and other financing? 2. Can you think of reasons why the bank- ing industry might be moving toward con- solidation, rather than seeing a rebound in smaller community banks? 3. If a small business cannot get a bank loan. where else could it look for financing? THE CHALLENGES OF OBTAINING SMALL-BUSINESS LOANS With the financial of the late in a amounts to big W 2000s came a three-punch cash flow eased back on elevated credit requirements, "large" small businesses ($10 milmorations or in revenue). Therefore, many startups and small businesses still may be unable to secure a bank loan and will have to continue relying on alternative financing sources." knockout for many small businesses: fall- ing sales, lack of collateral to apply for loans due to plummeting values of commercial and residential real estate, and difficulty finding banks willing to issue small-business loans. Even when the economy began to recover, banks remained cautious and risk-averse, and stricter regulations required them to retain more capital and therefore lend less generously. However, things are looking up for the small-business lending environment. During the recovery from the latest recession, the amount of small-business loan applications approved by large banks grew from 9.7 to and rising property values allowed small- business owners to return to using real estate as collateral. These trends are expected to continue as the economy further rebounds. On the other hand, significant barriers continued to prevent the lending environment from returning to pre-recession levels. Tradi- tionally, small community banks were a large source of small-business loans, but many went out of business with the market crash; now, rather than their numbers rising again, the industry is moving toward increased consolidation in fewer, larger banks. These banks do not make much money on smaller loans (under $1 million) and so focus more on Discussion Questions 1. Why is it important for small businesses to have access to loans and other financing? 2. Can you think of reasons why the bank- ing industry might be moving toward con- solidation, rather than seeing a rebound in smaller community banks? 3. If a small business cannot get a bank loan. where else could it look for financing?
Expert Answer:
Answer rating: 100% (QA)
Solution 1 aFinancial management is important because it helps the busi... View the full answer
Related Book For
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
Posted Date:
Students also viewed these accounting questions
-
The interest in a three year GIC is $8269.17. If the GIC was purchased for $180 000, what is the nominal interest rate if interest is compounded quarterly.
-
A commercial bank has $ 200 million of floating-rate loans yielding the T-bill rate plus 2 percent. These loans are financed by $ 200 million of fixed-rate deposits costing 9 percent. A savings...
-
Bank A offers loans with a 10 percent stated annual rate and a 10 percent compensating balance. You wish to obtain $250,000 in a six-month loan. a. How much must you borrow in order to obtain...
-
The ordinary share capital of PP Ltd (a trading company) is owned 32% by QQ Ltd, 35% by RR Ltd and 23% by SS Ltd. The remaining 10% is owned by various individuals, none of whom own more than 1%. All...
-
Suppose that {yt} and {zt} are 1(1) series, but yt - zt is 1(0) for some 0. Show that for any , yt - zt must be 1(1).
-
Stem cells are responsible for a. Red blood cell production. b. White blood cell production. c. Platelet production. d. The production of all formed elements.
-
Distinguish the following data as qualitative and quantitative. Explain why. a. Social Security Number. b. Zip Code. c. Degree of job satisfaction. d. Price. e. Age. f. Effectiveness. g....
-
The following is a list of waste activities found in an office. Classify each one as a type of waste as represented by the acronym DOWNTIME (Defects, Overproduction, Waiting, Not utilizing people to...
-
The demand for the new Christian Paboutin shoes can be written as a function of its selling team of the shoe company estimates that there is a base demand for 430000 shoes (mean will buy the shoes if...
-
Trace or copy the graph of the given function f. (Assume that the axes have equal scales.) Then use the method of Example 1 to sketch the graph of f' below it. (a) (b) (c) yA
-
We can apply the chi-square testing framework to the second problem in this section: evaluating whether a certain statistical model fits a data set. Daily stock returns from the S&P500 for 10 can be...
-
4. A cannon weighing 4600N fires a 1.8kg cannon ball with a velocity VB = 170m/s. What is the recoil velocity vc of the cannon?
-
Get Wired, Inc. Income Statement Year Ended December 31, 2025 Net Sales Revenue $445,000 Cost of Goods Sold 210,200 Gross Profit 234,800 Operating Expenses: Salaries Expense $75,400 Depreciation...
-
How do you know and understand as a manager when it is time to change the payment system in your company besides doing meetings and receiving feedback from the employees? cite all references please
-
Identify the types of renovation projects mentioned below and explain your answer. (10) The designer is busy choosing fabric for the restaurants torn chairs to be re-upholstered. John, one of the...
-
A cyclist, starting from rest, applies a horizontal force of F = 3 5 7 Nto his bicycle, moving across flat ground for a distance of dflat = 2 6 8 mbefore encountering a hill making an angle of theta...
-
Imagine you are Rip Van Winkle's daughter, Judith, writing a journal entry after her father reappears after 20 years. Try to get into the mind of Judith. Be imaginative and creative. Pretend you are...
-
Rewrite the code of Figure 7.3 in Ada, Java, or C#. Figure 7.3: template class queue { item items [max_items]; int next_free, next_full, num_items; public: queue () : next_free (0), next_full(0),...
-
Use your knowledge of balance sheets to fill in the amounts missing in the text. S 12,000 Cash Accounts receivable Inventory Total current assets Gross P&E Less accumulated S 50,000 Accounts payable...
-
What are some factors that influence the commission on a stock trade with a broker?
-
The four stocks listed in the text are part of an index. Using the prior information, a. Compute a price-weighted index by adding the stocks' prices at time t and time t + 1. What is the percentage...
-
Consider the data file mroz on working wives and the model \(\ln (W A G E)=\beta_{1}+\beta_{2} E D U C+\) \(\beta_{3} E X P E R+e\). Use the 428 observations on married women who participate in the...
-
Problem Decide whether the sampling method is independent or dependent. Then determine whether the response variable is qualitative or quantitative. (a) Joliet Junior College decided to implement a...
-
Using the data from Table 2, construct a \(95 \%\) confidence interval estimate of the mean difference, \(\mu_{d}\). By Hand Approach Step 1 Compute the differenced data. Because the sample size is...
Study smarter with the SolutionInn App