Access to Bank Credit to Small and Medium Enterprises Essay Example for Free

Access to Bank Credit to Small and Medium Enterprises Essay Finance function is the most important of all business functions. It remains a focus of all business activities. Financing SMEs has acquired enormous importance in contemporary world of finances. This is primarily due to the national focus and priority of various countries developed and developing ones as well. In the Sri Lankan context , the government has provided impetus to the authorities to increasingly cater to the emerging financial needs of the SMEs. Bank and Institutional finance are expected to be made available on easy and flexible terms and conditions and on priority basis. Small and Medium Enterprises(SMEs) are hit by poor access to funds. This can be overcome if financial institutions are able to assess firm- specific and general risks and offer innovative products. This as per my personal opinion can be achieved by the formal financial institutions even when the so called sound credit principles are applied in a firm-specific manner to suit individual borrowers. In order to obtain bank credit, SME loan applicant shall prepre an effective credit proposal ,in a way, that the financial institution could consider favourably. See more: Beowulf essay essay SMEs such as restaurants, lathe-work shops, brick-kilns, grocery stores, rice mills, factories and farming etc. need finance to purchase capital goods and raw materials, procure stocks, pay wages ,meet other working capital requirements and support expansion plans. Despite the efforts of the Government and support from the Ministry of Finance and Planning and the Central Bank of Sri Lanka by including SME as a priority sector and by providing refinance facilities , there continue to be a huge demand supply mismatch in SME financing. One of the major reasons for banks being unable to bridge this gap is the perceived credit risk involved in financing SMEs. This is primarily due to non-availability of proper accounting records, valid bills and working capital management etc. As at present,to mitigate such credit risks , banks typically look for enhanced collateral or equity , both of which cannot be brought in by most entrepreneurs . Further, due to small size and local presence of SMEs , the transaction costs involved in financing them are relatively very high. However, the good news is that wider credit distribution could be made to SME sector using modern secured transaction law ,introduced recently by the Secured transactions Act 2009, which recognizes utilization of movable assets of a business as collateral to obtain credit. Further the Institute of Chartered Accountants of Sri Lanka(CA Sri Lanka)in its capacity as the sole accounting standard setting authority in the country has introduced a simplified financial reporting standard for the benefit of the SMEs in the country. The reporting framework so far has been a general setoff accounting standards to be used by all organisations . In 2011 CA Sri Lanka published the Sri Lanka accounting standards for SMEs (SLFRS for SMEs) with effect from 1st January, 2012. By removing some accounting treatments permitted under full SLFRSs, eliminating topics and disclosure requirements that are not generally relevant to SMEs , and simplifying requirements for recognition and measurement, the SLFRS for SMEs reduces the volume of accounting treatments applicable to SMEs by more than 90% when compared with the full set of SLFRSs. SLFRS for SMEs would be applicable for the entities that do not have public accountability (listed companies) and publish general purpose financial statements for external users such as Banks and supplier creditors. This will greatly help SME entrepreneurs to access other organizations in a formal manner and enhance their businesses, once they commence practicing this accounting reporting procedure. In the face of the bank’s reluctance to lend for want of proper accounting records , these enterprises are compelled to resort to high cost, non-continuous financing from money lenders and other informal sources , or continue to operate at sub-scale. However when SMEs start practicing and using above two facilities ( provisions in the Secured Transactions Act 2009 and the simplified SME Accounting recording procedure) the problem of enjoying credit from formal institutions such as Banks will be greatly reduced. Risks faced by any business can be broadly classified as idiosyncratic or systemic. Idiosyncratic risks are specific to an enterprise , like skill of entrepreneur or location of business. Systemic risks on the other hand , are beyond the control of any enterprise Such risks make up the environment in which a business operates ,that is, the economic environment, social environment, fiscal environment etc.. Thus the systemic risk involves risks due to change in preference of customers, changes in economy and changes in tax structure etc. Therefore the key to financing any enterprise lies in the ability of the borrower submitting his credit proposal with relevant information necessary o financier to evaluate the loan applicant to manage the risks involved in the proposed business. High quality origination can help evaluate idiosyncratic risks specific to the enterprise, well. Traditional form of risk mitigation is to cushion the risks with as much as equity from the entrepreneur. A high quality local financier with geography and business specific information about such enterprises in the operational area will be able to evaluate and manage this risk well and will demand less equity to be brought in by the entrepreneurs. Systemic risks, however, are quite different from the firm-specific risks and are arising out of the changes taking place in the market characteristics. It affect the business in every aspect and as such is huge and no amount of equity is sufficient when the financier is uncertain about an enterprise selling anything at all in the environment where demand patterns and economic situations can change very quickly. Therefore particularly in financing procurement of capital goods for long periods ,the banks search for cues to establish that the business has a current and future ability to service loans, even in an uncertain business environment. Hence in financing acquisition of capital goods it takes the form of project evaluation , however small is the business. Such situations can be managed by local bank branch which is quite familiar with the market environment of the locality. Thus the turnover and the other financials can be projected by the local bank branch staff in a more realistic manner using their knowledge in customer preferences and scale of demand in the area. This helps banks to reduce the risk involved in project loan type term finance. Further more flexible and innovative evaluation techniques have to be used in considering term loans for SMEs. However, SME enterprises that have large number of cash transactions , poor record of sales, produce undifferentiated goods and lack known usual clients , assessment of systemic risk becomes very difficult. Such challenges, however, can be addressed through structures , that allow financiers to trap cash flows by imposing conditions in the loan offer letter that permit resorting to a stronger and well established sales pattern in a supply chain. Some ways of financing working capital needs of SME businesses are supply chain financing where a supplier and a buyer have maintained books of accounts properly can be financed. For example , small enterprises that manufacture and supply sauces, jam and the like to large enterprises such as supermarkets can be financed if their cash flows are reconciled with bills , or by obtaining a collateral /guarantee from the company to which it supplies. Banks also can finance similar transactions of SMEs by discounting Bills of Exchange drawn by the supplier( SME entrepreneur ) and accepted by the large enterprise to which supplies have been made. This provides part of necessary working capital needs of the enterprise enabling it to continue production at an enhanced scale.

Analysis of the Running Man :: essays research papers fc

Analysis of the Running Man Sometimes there are hurdles in life that require great courage to overcome. We must utilize our inner strengths to motivate these courageous actions. Loren Eiseley sets an example of this in The Running Man- a chapter from his autobiography, All the Strange Hours. In this essay he reveals memories that show his lonely childhood which gives him the courage to overcome his problems.   Ã‚  Ã‚  Ã‚  Ã‚  Loneliness is what ultimately sparks his courageous action later on in his life. â€Å"I remember the pacing, the endless pacing of my parents after midnight, while I lay shivering in the cold bed and tried to understand the words that passed between my mother and my father.†(Eisley,337) This quote taken from the running man is just one example of his deep loneliness that he was faced with as a child. Even when he was around his family he still felt lonely. Whenever he came upon a ruined farmhouse and found old papers scattered across the floor that shared his last name, he realized that a German possibly like him had lived there. He was amazed that his family hadn’t known this family. If only the family could have still lived there he would possibly have companions that were a lot like him. After years of torment by his loneliness he grasps his courage and runs. Eiseley is always running, through his childhood and most of his adult life.   Ã‚  Ã‚  Ã‚  Ã‚  He felt there was more out there for him. The life he was living was inadequate. This determination is a product of his childhood aspirations for a better life. This is proven by his childhood tradition of burying things and digging them up again instead of participating in childish games. Eiseley does not know why he would dig in the dirt or play with the gravel. â€Å"There was a lot of building being done then on our street. I used to spend hours turning over the gravel. Why, I wouldn’t know.†(338) As a child he embraces the rush of discovery and the thrill of adventure in his seemingly insignificant dirt pile. He was fueled by a unknown force in his childhood to discover more in life. This gave him the courage to leave home and discover things like science and anthropology.   Ã‚  Ã‚  Ã‚  Ã‚  It takes great courage for Eisley to return to his mother’s grave. In an affect this completes the circle of his life.

Global Financial Crisis Essay

The current global financial crisis which became prominently visible during September of 2008 is considered by most economists and world leaders the worst kind since the Great Depression. It is equated with the failure in conservatorship of the many financial institutions based in the United States of America. The US is considered the most powerful and the wealthiest nation or country in the whole world that every change that occurs can affect the current status of different countries. The failures committed by the US financial firms have evolved into global crisis affecting the financial stability of different continents like Europe and Asia. In Europe, bank failures and decline in various stock indexes are experienced. Also a large reduction in market values of equities and commodities in the world market occurred. Around the world, the United States of America is very influential and is the most prominent country in the world. One proof of this is the currently finished presidential election of 2008. Each and every nation in the world had their bets on who is going to attain victory between the two candidates running for office. The whole world is not taking their eyes of on who will win between John McCain, a white candidate and Barrack Obama, a black candidate. Not only the people of the US are excited in the incoming results but every person, mostly world leaders, are anticipating on the victory of the republican and the one who is craving for change. McCain is the presidential candidate that every person sees as someone who will continue the way current president George Bush rules the country while Obama, the other presidential candidate who claims of bringing change in the way the US should be governed. Every community supporting both presidential candidates becomes very vocal on who to put into office. But, the end of every fight comes and the black community and the rest of the United States have spoken putting someone who is craving for change in the position making Obama the first black president of the most influential nation worldwide. Obama attaining victory has inspired a lot of people, making it possible for every person to gain what they mostly wanted and in this moment, change is still possible or change can still be perceived. What is the connection between the current global financial crisis which is considered the major crisis after Great Depression and the just finished presidential elections? Well, the effect of every step that the country is taking affects other countries’ situation. On how the new president will govern the country and how he will offer help to other countries is what every nation is expecting from the most prominent nation in the world. While, the current global financial crisis have started in the failure of the United States which is now affecting the whole world is also very influential but in a very negative way for some other countries. Global financial crisis is mostly equated, or can be treated as economic crisis because the causes and the effects of the said crisis are mainly economic and mostly on the financial stability and the economic state of the country. Economic and financial stabilities can be the changes in prices of commodities, bank failures or unemployment. Some of the causes which lead to the global financial crisis are the following: (1) high commodity prices, (2) trade, (3) inflation, (4) unemployment, (5) return of volatility, and (6) economic governance. High commodity prices can be mostly seen in the purchase of food and oil. Food is very first in the list because it is the main need of every person. The family should have enough food to eat every day to maintain the health of every person. Food is the number one need of every person in order to live. Oil follows food in the list since it is the most exported and imported commodity in the world since most nations are not capable of producing oil while other nations are experiencing a surplus of oil. But the price of oil in the world market have reached $147 which led to the increase of oil prices in every country importing oil and the rise in other prime commodities has followed. Inflation is also present due to excess money supply around the world, speculation in commodities, agricultural failure, rise in the cost of imports and the rise in the demand for food and commodities. Unemployment is also considered one of the causes. The number of graduates or those people looking for jobs is growing largely each year while the number of jobs available does not increase as fast as the number of jobless people. It can be perceived that in the coming year, there will be 20 million people losing their jobs due to the financial crisis. These people who will lose jobs are mostly from the construction, real estate, financial services and auto sectors and industry. Economic governance is also important since it dictates how the economy of the country should be managed not only in time when the economy is stable but also when economic instability becomes unstoppable. How world leaders and economic advisors handle the situation is very important especially in the US because whatever decision they make will not only be perceived by the nation but also of different and other nations around the world that are mostly dependent on the US economic state. The global financial crisis can result to recession, rise in unemployment rate and liquidity crisis. Just after the 2008 US presidential election, leaders of the United States admitted that the country is in recession. This means that the economy is not stable as well as the financial capability of the country. This is the worst that can happen to the most influential country in the world since most of the countries in the world are depending on the economic changes that will be happening in the US for economic changes in their countries to also occur. Another worst effect that can be expected if the crisis will not be stopped is the rise in the unemployment rate all over the world. Major companies will be experiencing problems in their balance sheets that may result to the company closing down or laying off a number of workers. The global financial crisis may result in the economy slowing down and jobs will surely be affected. In what way? Investors might be experiencing emotions in the presence of paper based losses and there will be a visible decline in wealth. The state of the investment can experience a bad state that will choose to either close down or be taken over y competitors. Major companies can also result in selling their shares of stock because of the liquidity crisis. In this moment, banks will not be willing to lend money to other banks to protect the money and assets that their investors and depositors have trusted them. It will be a big risk for banks to lend money to other banks since some banks are already experiencing bankruptcy. Another thing is that importing and exporting products from other countries will be costly that the exportation and importation rates can be slowed down. In the exporting country, the commodity prices will be experiencing a decline. The exportation process slowing down, there will be lower prices for goods and services. The presence of the major global financial crisis has forced policymakers to focus on the problem well and come up with reforms that will address the problem encountered due to the crisis. Some policymakers had come up with reforming the global financial system in order to address the problem. World leaders and economic advisors have already conducted meetings regarding the global financial crisis talking about possible steps to address the problem itself and the problems that rooted to from the major crisis. The global financial crisis may have dangerous consequences mainly to the urban and rural poor, the labor sector and women and other marginalized sector of the society. These sectors are the most vulnerable to the changes that will be brought by the crisis so the country must first focus on these sectors. Policies focusing and protecting these sectors must be implemented to avoid involuntary hunger and unemployment rate. Since these are expected to be the most affected by the crisis, the state should be able to implement policies regarding social protection of these sectors. Companies who are mostly managing and holding these sectors must consider the state of the workers before deciding to lay-off workers. The most possible way is to offer lower salary for the workers if some of them will not agree to being removed from the job. The lower the salary, the greater the possibility for the owners to pay all the workers and there will be no problems regarding formation of unions because of the removal of employees. The companies just need to talk it over to their employees before making a move because the laborers will be the most affected sector. Investors and depositors are starting to save money on their own than putting them on the banks since there are a number of banks experiencing difficulties in maintaining their balance sheets which can result to bankruptcy. Most of these investors and depositors are afraid to trust the banks to take care of their money due to the fact that when the crisis ill become bigger, they will have no money to spend on their basic needs. In this way, the state can talk to the central bank in lending money to banks that need most of the supplies of money to adhere to the customers’ needs and wants. Investors and depositors still have the rights to their investments. The state should also allocate budget for basic services. Long term plans are not possible at this very moment of crisis since as time passes by the number of people who might be experiencing difficulties due to the crisis is rising. The state should not focus on what can be done for the future but focus more on what can be done today to address the current issues brought about by the global financial crisis. Short-term goals are more advised right now since there is a need for a quick recovery for other people especially the ones belonging to the lower-income groups, they are the most affected anyway. Overseas workers have been laid-off because some companies are securing jobs for their own country men. Overseas workers should not just be removed from their work; even though they are not from the country they should be given the same right as every worker in the country has. Protection of these workers should also be implemented since most of them are taking jobs that the citizens of the country cannot take to get as jobs since most of them see the jobs very low. The global financial crisis might bring something unexpected to the country. As some economists have already perceived the rise in unemployment rate, liquidity crisis and recession might occur. Some may say that this is uncontrollable yet certain measures must be taken to address the problem at the present. Short time goals are the most advised at this moment. s

Essay on Song Analysis Micheal Jackson- Beat It - 1237 Words

Selina Pearl Professor Finch English 109 03 August 2010 Michael Jackson – â€Å"Beat It† In 2009, we lost one of the greatest entertainers in music history, however his music still lives on, inspiring and touching people’s heart. I have always been a fan of Michael Jackson, and the reason why I picked this song is because it presents a strong message. Not only did Jackson make a powerful statement with his lyrics, he also made one with his choice of rhythm and beats. The guitars and drums that were used, give the song a dramatic rock vibe. According to music critics Jackson’s album Thriller seemed to be inspired by â€Å"a mixture of several genres which previously were never combined† ( thrilleralbum). It is pretty obvious†¦show more content†¦The second verse talks about making the right choice to just go away instead of shedding blood, and trying to be a tough guy. The third verse simply describes that even if one chooses to walk away, it is better to be alive than to risk it. The fourth verse in my opinion talks about the consequences of fighting and that if one chooses to be violent, chances are that they will get hurt. As mentioned earlier the chorus defines to just walk away although â€Å"No One wants To Be Defeated.† It is better to go because in the end â€Å"It Doesn’t Matter Who is Wrong Or Right.† Jackson uses very powerful words and explains that it is always best to look out for yourself instead of proving yourself to others. It is not worth the struggle (songfacts). As I was analyzing the song, I was listening for specific sounds and noises that would symbolize the meaning of the song. I heard a police siren which could symbolize that if you get involved with gangs and violence, you will end up in jail. I also heard a snapping sound and deep breathing sounds. The breathing sounds could represent the sound of someone running away and catching a breath. I could detect sounds as if someone was getting punched and sounds of blades which could represent a fight. While searching for different meanings of the song I came across an interestingShow MoreRelatedJames Browns Influence on Michael Jackson2548 Words   |  11 Pagesthe music of Michael Jackson demonstrate the influence of James Brown? 2. Introduction: â€Å"The Godfather of Soul†, better known as James Brown grew to be one of the most influential artists in Michael Jackson’s life. As a child Michael Jackson was intrigued by Brown’s flamboyant performances on stage and would soon begin to implement them into his own stage acts. By the age of five Michael Jackson was already sealed into a world of show business by his father, Joseph Jackson. Deprived of a childhoodRead MoreMarketing Management130471 Words   |  522 Pagesthrough advertising and personal selling. Before producing a product, the key questions were: Can we sell the product? Can we charge enough for it? The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people