What are the Common Sources of Financial Constraints?
Several factors contribute to financial constraints faced by entrepreneurs:
Lack of Personal Savings: Many entrepreneurs start with limited personal funds, making it difficult to cover initial costs. Limited Access to Credit: Entrepreneurs often struggle to secure business loans due to lack of collateral, poor credit history, or the risky nature of startups. High Cost of Capital: Interest rates and other borrowing costs can be prohibitively high, especially for new businesses with uncertain prospects. Investor Reluctance: Investors may be hesitant to invest in early-stage ventures due to perceived risks and uncertainties.