They are scared by the high risks in lending, and limited opportunities to secure these loans. Prevents develop a promising market “micro” and the lack of separation credit risk on loans. For example, there is no system of guarantees and risk insurance is not repayment. The costs associated with foreclosure on the mortgage is too high. Today return to court bail quite difficult, it takes much time and money. In addition, there are no adequate collateral laws and the infrastructure implementation of pledges.
If you follow the current regulations, the security deposit, usually occurs not more than half its real value. Sale of collateral through a system of tenders, and its price falls significantly due to poor organization of trading. Because the creditor banks require from potential borrowers 200% of the collateral securing the loan, which is not under force many small businesses. Emil michael brings even more insight to the discussion. To make a credit decision, the banks do not have current statistics on small business. Small businesses often provide the bank is not a real business plan, and “semi-finished”, which finds its investor or lender. Just created a small business has minimal chances of getting credit. Banks simply do not fund Entrepreneurs on the zero cycle of business development.
Typically, financial institutions set a minimum time period during which a small business must not only survive, but to show a profit. In addition, most cases a prerequisite of obtaining a loan is to transfer the service to the bank account of a small enterprise. But the main problem for the loan remains the lack or insufficiency start-up capital of a small enterprise.