Business Financing Government Small
The small business enterprises play a very crucial role in the economy of any country. These are indeed a very important contributor to the gross domestic product. It is to be noted here that it is not the contribution that is made by individual business enterprise which makes it important for the economy, but it is the contribution that is made by the whole sector because the number of such enterprises in any country are far more than any other type of business enterprises.
The government recognizes this fact quite well and this is the reason
why it also understands the financial needs of these enterprises.
It is very important to make clear to the reader at the very outset
that the small business activity level does never mean that finance
is not required by the small
business enterprises. Instead, it is required more in the case
of small business enterprises as the small businessperson is mostly
found short of required funds. Apart from contributing towards the
national economy, the small business enterprises play another important
role in terms of employment. It is to be understood here that in
any country, this sector is indeed the largest employer. Sometimes,
it provides about 60-70% of all the business opportunities. Thus,
in no way it can be said that the contributions made by this sector
in any country is small.As we said earlier also, the finance is
of course required by the small business enterprises. Now the question
that arises here is that how the government provides the required
finance to the small
business enterprises after having understood their importance
completely. Let us discuss it in our next part of discussion.
THE GOVERNMENT ASSISTANCE It is quite obvious that the government in any country across the world would try its level best to provide the small business sector with the maximum financial assistance it can. Let us see how it is done. First of all, in almost all the countries, the government has made a special department and even ministries in order to provide all the essential help to the small business enterprises. The role of these offices is to formulate the appropriate policy towards the development of the small businesses. For example, in the United State, there is SBA, the Small Business Administration, the looks after the development of the small business sector in the nation. The various policies that are made by the government regarding the development of the small business sector are circulated to all the financing institution is the country. In cases, where the government owns these financial institutions like banks etc, it makes mandatory for them to provide a specific percentage of their total advances towards the small business sector.
Also, since this sector is growing at a fast pace, the non-government institutions have also started to provide finance to this sector in liberal way. Let us now discuss the exact nature of the government assistance that is provided by this sector.
THE EXACT NATURE OF ASSISTANCE Though the exact nature of the financial assistance that is provided by the government to these enterprises differs from one country to another, the concept is essentially the same. The first and the foremost form in which the government provide financial assistance to the small business sector are the grant. Grant can be described as financial support that is provided by the government to any applicant, where the applicant is not required to pay back the money. Thus, in a crude way, it can be understood that grant is the money given and forgotten. But there are many related aspects that need to be understood. First of all, the government mostly provides grants to the specific applicants only. Like in any nation, it is the role of the government to uplift the people that have lagged behind for the overall development of the nation. This is the reason why in almost all the countries, the women and the minorities are always given preference in providing the grants. Thus, all the small business entrepreneurs cannot get the government grants and it is really very difficult to get these. Also, the government provides a percentage of the total financial requirement of a small business unit as grant and the rest has to be arranged by the entrepreneur. Also, the grant is passed on to the small business enterprise through the various government offices and the financial institutions.
The next way in which the government provides the financial assistance to the small business enterprises is by way of guaranteeing the loans that are provided by the various financial institutions. It has been observed that in many cases, due to the small business enterprise being new or there are not sufficient assets to cover the loan etc, the financial institutions are reluctant to provide credit facilities to the small business sector. But when the government provides the necessary guarantee for the loans, the credit facilities are easily made available to the small business enterprises. This is another way by which the government helps the small business sector to fulfill their all the financial needs. Apart from all these, the various government offices concerned with the development of the small business enterprises also provide the necessary training and counseling to the small business enterprises.
If providing the financial assistance is important for the small business enterprise, it is also equally important that the quantum of finance that is required by the small business enterprises is also calculated correctly. This is also the field in which the government helps the small business enterprises. There are counselors and other experts that are employed by the government in its offices and their role is to judge whether the requirement for finance as has been calculated by a small business entrepreneur is correct or not. The government also organizes various seminars and conferences, which are attended by the successful businesspersons that share their experiences and knowledge with the various small business entrepreneurs. Thus, it can be said that the government provides all the necessary information as well as the finance for the development of the small business enterprises.CONCLUSIONAfter reading the above article, it can be rightly said that the government completely understands the importance of the small business enterprises in the economy of the nation and this is the reason why it provides all the assistance in various forms as discussed above.
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