We can see that there are a plethora of options for capital funding available with business. Not all the options are available with each of the businesses. If you rank all these options in the order of preference, one would find that most of the practical, feasible and available options are already exhausted. many measures suggested above are not practical for small and medium size of businesses. Also, the management of these small companies is not experienced in carrying out this type of “capital creation activities”. They may not have sufficient time for these activities as the leadership team is very very small. The remaining options either do not provide adequate amount of capital or are having unreasonable conditions in terms of cost of capital, interest rate, term of repayment, requirement of security, etc. Financial institutes such as banks are simply incapable of understanding the quality of Management and the financial merit of a business. They simply go by the rule book and refuse capital to small businesses. Each of the financial resource has its own criteria of selection of the borrower or customer and they have their own procedures for availing the funds. Small businesses are not aware of the complexities of the financial world. Note that in the opinion of the management of the business, the business is an attractive investment, but this argument is not bought by the financial institutions. It is the reality of the world that deserving businesses also remain deprived of capital.
Now, this is a serious time to explore equity funding. Apohan shall provide you end to end customised service in availing equity funding.
Miscellaneous reasons for no equity funding
Many businesses are simply not eligible for many of the external equity funding options. Businesses continue to remain under financial duress without exploring the option of equity finance.