Illustrate with example the role of "Loan" in business.
Answers
Answer:
Loan helps small businesses to expand their business and to introduce capital. ... Loan helps businessman to buy new machines and plants. Loans help in purchasing inventory.
Answer:
Answer :
Explanation:
The loan plays two different role in business:
(a) Credit plays a positive role when the borrower is able to return the loan amount on time
and also made some profit with the use of that money. For example, Salim, a shoe
manufacturer took a loan from different sources to complete the order of 3000 pair of
shoes. In the end he delivered the order, made profit and repaid the loan.
(b) Sometimes credit is very painful as it pushes the borrower into such a situation from
where recovery is very difficult. In this situation, the borrower is not able to repay the loan
and many a times caught into the situation of debt-trap. For example, a small farmer
Swapna took loan for crop cultivation but due to some reason she faced the situation of
crop failure. So she took another loan for spraying pesticides but the production was not
enough to repay the loan. So she was caught in debt-trap.