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

Manav will decide whether to borrow from the bank or the moneylender by considering some factors like:

1. Ease of availing loan: Manav will assess whether he meets the bank’s eligibility requirements, such as credit history, business experience, and annual revenue. Moneylenders may have more lenient eligibility criteria but may lack transparency.
2. Interest rate applicable : Formal banks typically offer lower interest rates compared to moneylenders. Moneylenders may charge higher interest rates due to their informal nature.
3. Collateral demanded : Banks usually require collateral (such as property or assets) to secure the loan. Moneylenders may accept personal guarantees or other forms of security.
4. Repayment facilities : Manav will consider collateral requirements, and repayment terms set by the bank. Banks have standardized procedures. Moneylenders may have simpler processes but could impose stricter terms.
5. Documentation : He will also consider paper work involved in the process of availing loan. Bank has to strictly follow the KYC norms.
6. Existing high loan : Existing loans can stop him to avail fresh loan from banks.