Page 114 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 8: Setting up a Small Business Enterprise

Notes
The Findings
Big banks approved 15.9 percent of the small business loan applications in the index, up
from 15.3 percent in January 2013 and 11.7 percent in February 2012. February’s big bank
approval rates were the highest since Biz2Credit began compiling the index in January
2011. Small bank approval rates have also ticked up, to 50.3 percent of loans in February,
up from 49.9 percent in the previous month and from 47.6 percent in February 2012.

Biz2Credit Chief Executive Officer Rohit Arora pointed to a handful of reasons for higher
approval rates: A stable economy over the past 18 months has given banks an historical
basis for making loans, and attractive premiums on securities backed by Small Business
Administration-guaranteed loans are giving banks greater incentive to work with small
businesses.
The banks’ need to maintain larger capital bases under Dodd-Frank regulations may also
be driving higher approval rates as lenders seek to retain customers. “Big banks are
starting to say, ‘If I keep turning away deposit customers when they come to me for loans,
we will lose a lot of the good deposit relationships going forward,’” says Arora.

If there’s a loser in the banks’ uptick, it may be credit unions. Their loan approval rates in
the Biz2Credit index fell for the ninth straight month. One explanation, says Arora, is that
with banks, small and large, granting more small business loans, credit unions are receiving
applications from shakier credit profiles. Another likely reason for the decline: Credit
union lending is capped at 12.25 percent of a credit union’s assets, as Credit Union National
Association Executive Vice President Paul Gentile told Bloomberg Radio’s Pimm Fox.
Source: http://www.businessweek.com/articles/2013-03-12/an-uptick-in-small-business-loans-from-
big-banks#r=hpt-ls
A company may own several factories, probably indifferent locations. The industry comprises
many factories, or plants, and a number of independent enterprises. Industrial location is primarily
concerned with the setting of a single enterprise, rather than the whole industry, although the
location of the industry is in itself a location factor. The concepts of site and situation play
separate roles, although we may use the word site in relation to location when we are really
looking at the situation of the enterprise. The site of an enterprise, or group of enterprises, is the
actual physical location, or block of land. There are some basic location constraints for the site.

Example: A plentiful supply of flat land, access to transport, power and water, availability
of labor, and capital and finance facilities.

Almost all cities will possess appropriate industrial sites and these will be zoned by councils. It
is therefore the situation, or the relative location, in relation to other factories and the industry
that is important. Like agricultural and central place location theories, Weber makes assumptions
that simplify reality, but unlike these other theories, he does not assume an equal distribution.
Rather he assumes that raw materials are unequally distributed in fixed locations.

8.1.1 Assumptions

Following are the various assumptions in this context:
1. There is an uneven distribution of natural resources on the plain. Raw materials are
concentrated in specific sites.
2. The size and location of markets are given at fixed points on the plain.

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