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18 January, 07:37

Are the security needs of small businesses different than those of a larger corporation?

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  1. 18 January, 07:45
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    Well, this is sort of a "Yes and No" and "Depends on the Situation" type of answer.

    But in a way, yes. to understand this, we have to look at a key area that separates Small businesses from large corporations.

    That is their "Risk".

    Small Businesses may be sole proprietorship, partnerships or even family business. When going to raise capital, especially debt capital, what they lack is a "guarantee" that they can pay it back and that their business will continue for a foreseeable time in the future to be able to pay it back!

    On the contrary, the corporations have a separate legal personality and a perpetual succession, meaning that if the owners pass away or change, that won't affect the on-going status of the company.

    Such things matter the most as small business inherently faces such Risks of continuation and succession.

    Moreover, larger corporations often have bigger balance sheets numbers, profits, and cash flows contrary to small and medium enterprises. Profits and cash flows are another angle the lenders look at when it comes to security needs.

    So yes. Security needs can very much differ between small businesses and Larger corporations.
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