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Problem of Difference between Capital Requirement and Funding Availability

Apohan Corporate Consultants Pvt. Ltd. > Financial Strategy > Problem of Difference between Capital Requirement and Funding Availability

Capital Shortfall!
Every business has its own intrinsic capital requirement and it is completely unrelated to how much money the promoters have at their hands. For every business to be successful, growing, thriving, profitable, rewarding, and scalable (or at least to be barely surviving), it does need a basic minimum amount of capital. A business just can’t do without that threshold minimum capital. It is not necessary that the capital brought in by the promoters or the institutional lenders is adequate to meet the minimum requirements of a business. If this is the situation in the beginning, the business wouldn’t simply take off. If this is the case at some intermediate point, the business would suffer from financial distress.

In almost all the cases of small medium enterprises, the capital available with the the business through all the conventional means and lenders is far lesser than the actual requirement.

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