Accessing External Finance for SMEs Essay Example | Topics and Well Written Essays - 2250 words

Accessing External Finance for SMEs - Essay Example This essay stresses that Entrepreneurial Finance plays a significant role in helping managers to choose better financing and investment strategies relevant to their line of business. The business sector has been growing tremendously in the recent times. This is because of prevailing affirmative business and market factors. The ever-growing technological advancements, population, and economy has provided the requisite labor of production and increased the demand for the finished products. As a result, diverse businesses have come up to supply the needs of the demanding citizens in our economy. While some businesses are well-established entrepreneurs, most of them are small and medium sized enterprises that face many challenges in starting up, financing, management, and market competition. This paper makes a conclusion that there is evidence of information and control limitations in financial markets especially in the process of seeking debt financing. There is significant credit rationing procedure that denies borrowers a chance to borrow all they want, or to borrow at all. However, many entrepreneurs have been seeking debt finance for the startup, expansion and the running of the enterprise by selling the bonds, bills, notes, debentures, or mortgages held by the business. Entrepreneurs use debentures to raise capital without selling the enterprise, giving up future profits, or having to use their assets.