Question

What are the disadvantages of borrowing from commercial banks?

Answer 1

1. Finance is available for short periods. Extension or renewal of a loan is difficult and uncertain.
2. The procedure for raising finance is cumbersome as banks make detailed investigations of the borrower's business.
3. Banks insist on personal guarantees and security of assets.
4. Banks many put restrictions on the sale of mortgaged goods, causing difficulties for businesses.