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Resource Mobilization — Entrepreneurship STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEntrepreneurshipResource Mobilization3 Marks
Question
What is margin money?
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Answer

When an entrepreneur raises capital through bank or financial institution, then if he has to contribute some percentage of the total borrowed/ released amount by the bank or institution on behalf of the entrepreneur as margin money.
  • It is the contribution by the borrower/ entrepreneur towards the cost of the project for which is applied for.
  • No bank or financial institution will ready to finance the project unless margin money is contributed.
  • No collateral security is required at the time of margin money contribution.
  • It may vary from 15-25% according to type of business and institution.

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