Manav needs a loan to set up a small business. Manav will decide on whether to borrow from the bank or the moneylender? Discuss.

Manav will decide on whether to borrow from the bank or the moneylender to set up his new business on the basis of various factors:

(i) First of all he needs to have collateral or an asset through which guarantee could be provided of his loan. And in case he doesn’t have any asset then loan can’t be provided by the bank. In this situation he will have to pay a visit to moneylender even if the latter charges are of high interest rate.

(ii) If he is not aware of loan borrowing from the banks then he might not be able to borrow credit from it.

(iii) After many practices if he won’t be able to find the loan then he has to visit any moneylender for this purpose of money borrowing.