“Central”: 7 reasons behind not applying for financing

76% of small businesses have enough cash to avoid borrowing

Small business owners considered that having existing loans prevented them from applying for new financing.


The Central Bank stated that there are seven clear reasons that have been reported, behind the failure of small, medium and micro companies to apply for loans or financing from banks, the most important of which is the presence of sufficient funds for the owners of these projects from personal savings and others.

The Central Bank clarified, in the results of a periodic survey on the small and medium-sized companies sector, that 76% of the sample participating in the survey from those companies, confirmed that they have sufficient funds that suffice them from borrowing, considering that this is the strongest reason behind not applying for credit.

Interest rate

According to the results of the “Central” survey, the second reason for not submitting a request to borrow is the desire of small business owners to avoid debt, which was expressed by 19% of the participants, while the high interest rate was a third reason by 6%, while 4% of the participants considered In the survey, the presence of existing loans prevents them from applying for new financing.

to reject

And the “Central” indicated that the fifth reason, according to 3% of the participants, is that they are not encouraged to borrow due to previous refusals, while another 3% stated that the reason was due to the burden of repayment, while 1% of the participants said that it was due to the implementation of reducing procedures. costs, while 2% indicated other reasons they did not specify.

family togetherness

Commenting on, the entrepreneur, Mohammed Al-Muhairi, said that small and micro enterprises are based on family solidarity more than relying on one individual, so we find that their owners prefer to rely on their savings or family savings when liquidity is needed, pointing out that this is better than borrowing with large interests and installments. , the return may not be covered, and Al Muhairi added that many owners of start-up projects set a budget that covers at least two years, including the availability of a guaranteed source of liquidity, away from borrowing, until the success of the project.

For his part, an entrepreneur who only introduced himself as A.M. said that the high interest on bank loans, along with the large number of documents, which may not be available to any company at its inception, push the owners of these projects to arrange their financial affairs before launching the project, including Ensures that you do not resort to borrowing early.

He stated that exploring the market and the extent of marketing success for the product or service launched by the entrepreneur is a challenge with which many prefer not to burden themselves with a heavy burden, so they prefer to rely on what they or their families save.

• 19% of small businesses prefer not having debt.

The 7 reasons

■ Availability of sufficient funds for the owners of the projects from personal savings and others.

■ The desire of business owners to avoid debt.

■ high interest rate.

■ Existing loans.

■ Previous funding rejections.

■ Burden of repayment.

■ Reduce costs.

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