The institutional sources of credit, such as the banks, are usually reluctant to finance microenterprises, and in many instances they exclude the microentrepreneurs from formal financial services because:

Question

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Microentrepreneurs often struggle to meet the stringent collateral requirements set by banks, face perceptions of high risk due to the elevated failure rates of small businesses, and are deemed uneconomical to serve because of the high operational costs relative to the small size of the loans they require.

The Institutional Sources of Credit, Such as the Banks, Are