Corparate finance Essay Example | Topics and Well Written Essays - 2750 words

Corparate finance - Essay ExampleOne of the to the highest degree significant challenges that about SMEs have faced regardless of their country of origin is the problem of access to financing for their trading operations as well as for their growth and using. Studies reveal that most SMES argon characterized by very tight budgets and liquidity constraints and are therefore constantly in search of new sources of financing (Jiang, Li & Lin, 2014).According to Abereijo and Fayomi (2005), the coevals of entrepreneurial ideas is not normally a difficult challenge for most people, however, the generation or availability of funds to fork out the idea into a streak business is another. A lot of ideas have that were considered excellent and innovative have been known to die simply due to the fact that the entrepreneurs who came up with them lacked funds to translate them to businesses and also due to the fact that financial institutions could not agree to invest in them. It is therefor e important to note that finance from whichever source, is critical for the growth and development of SMEs and in order to maximize the profits realized from the business. Given the nature of SMEs as shown above, there is therefore critical need for the financing of their activities mostly from international sources of finance (Briozzo, 2012).It has been suggested that on a general scope, SMEs normally have four main financing requirements these are the initial investments on infrastructure, the operational costs which are sometimes required in lump sum amount, growth and expansion, and finally, unexpected opportunities that arise during the course of operations requiring a quick access to finances. It is however remark that despite the glaring need for finances, most SMEs often choose to use internal sources of finances for example from the entrepreneurs own funds or from the cash flows from operations instead of choosing external sources of finance. This choice is normally deter mined by the relative