amount to cover the revenue, so there won't by overstocking the business which will eventually lead to extra expenses in purchases and storing. If the expenses reduced and revenue is still intact, the breakeven will be achieved sooner.4.Avoiding bankruptcy:Good money liquidity in the company is an outcome from a good Working capital management. In this situation, taking loans and overdrafts from banks to cover up the costs and expenses won't be necessary. The reasons of going bankrupted is the inability to pay debts to the suppliersand to the bank.5.Cheap Financing:To avoid debts and overdraft which always comes with bank interests, it is cheaper and better togo for the personal financing (using self-funds) to cover the expenses sometimes or expanding the business. This also avoids the risks of delaying debts payments or even bankruptcy.Task 2The capacity to get to fund is a main consideration influencing the development and accomplishment of SMEs. In this manner, the accessibility of adequate access to fund guarantees the capacity of SMEs commitment to the financial development of Economy. Numerous organizations confront a great deal of difficulties securing advances from banks and SMEs are the most influenced. (Moro, Fink and Kautonen, 2014) Banks and finance companies is a gate way for the people who wants to open a business or finance day to day operation. But the finances won't be given easily due to the high-risk of the investment. The SMEs lacks Security to be given to the bank, the banks are usually asking for high securities to be ceased if the business is unable to pay to the bank. The banks will give a difficult or expensive scheduled compulsory payment to the SMEs that theyare funding, so it will be very difficult for the business to pay the compulsory expense to the bank, it will paralyse the business and lead it to bankruptcy.Most of the SMEs who starts their business not have a proper Financial Statement, due to the fact that they do not need one when they start their business. The assets that they receive in thebeginning is very minimal and they usually use basic Accounting to calculate the income, and when the Business owner approach the bank to request for a loan or overdraft, the bank will ask for the Financial statements to check the cash flow of the business and whether it's profitable or not to invest in. and also, most of the SMEs lack professional management which even scares the financial institutions and the banks to give the funding to unprofessional managed business. This factors all create a disconcerting situation to the banks and financial institution to fund the business and sometimes give the idea that the firm won't be able to repay the funded amount on the scheduled time.There are other reasons that also make it discouraging for the SMEs to take loans from banks due to the long procedures that takes just to process the loan plus the high interest rates that is offered by the banks.Task 3

+13062052269

info@desklib.com

Oman SMEs Development and Support

Contribute Materials

Related Documents