Business loans are a barrier of entry into entrepreneurship

B usiness loans are not the most important aspect of starting a business, but they certainly can make it infinitely harder for one to venture into entrepreneurship if one cannot find a source of funding through banking institutions. Conversely, if one can get a business loan to fund a well developed business plan or finance an existing business, then entrepreneurship becomes a less arduous road. Making the decision to start a business is a formidable step all on its own without even having auctioned the plan. This is because like most endeavors the most important element is ‘planting the seed’. Everything else that follows that brave step can either grow the seed or completely crush it. Seeking a business loan, especially from formal banking institutions is often one of the things along the journey of entrepreneurship that often crushes the seed. This is because banks often require collateral and surety that those starting businesses often don’t have. And without the funding needed to get the business off the ground, the entrepreneur cannot hope to get the business going. Sure, there are other sources of funding that would-be entrepreneurs can acquire besides going through formal institutions for business loans. However, these are few and far in between and these sources of funding also have their own list of requirements that entrepreneurs may not always be able to fulfil.