An Empirical Study of Quasi Equity of SMEs: Evidence from The Hotels Of Himachal Pradesh

The initial source that an budding entrepreneur explores for the financing its newly set-up business is loan/funds mobilized from his friends and relatives. Following personal resources are the possible sources for meeting the financial requirements of a small scale business-personal savings, provided fund, from friends and relatives, personal asset sales, credit cards, inheritance, stock option sales etc. Since, these funds can be attributed to the family they are almost treated equivalent to equity contribution. These funds are commonly termed as Quasi-Equity (QE) or Equity ‘de-facto’. This study is based on the hotels of Dharamshala Tehsil of District Kangra in HP and analyze the factors that prompt the small-scale hotels towards mobilization of such QE. These loans are unsecured in nature and remain dominated to the loans provided by banks and financial institutions.