SMALL COMPANIES – HOW DIFFICULT IT IS TO GET FUNDING!

Abstract

The difficult task of achieving small companies’ mission, in combination with their capacity for survival, is a constant fight, easily observed in businessmen’s statements. Among these difficulties, many of which are shared by other companies, we highlight the hard task of getting funding from banks, in order to complement the company’s working capital needs or even for new investments. This article discusses this process by studying a real case, evidencing the experiences of two directly involved professionals, i.e. the owner of a small company and the bank manager, making the adaptations appropriate for an academic study. In the final phase of approving a bank loan, both sides are already convinced of the loan’s viability, and their relation is marked by friendship and mutual confidence. However, one last obstacle needs to be overcome: “how can this be discussed with the bank headquarters if the manager does not have autonomy and if the company manager cannot show reliable accounting figures?”. This article presents a model to assess and justify the company’s probable economic situation, obtained from non-official information, such as the “inquired balance sheet” for example, used by the Caixa Econômica Federal (1999). Finally, an appendix presents a glossary of the main concepts addressed in this study.