Explain with an example how the terms of credit can be unfavourable

money-and-credit

#1

Explain with an example how the terms of credit can be unfavourable for the small farmers.


#2

Terms of credit include collateral such as land titles, deposits with banks, livestock, building, vehicle, etc which small farmers are not capable of providing.
In case of failure of crops, it becomes impossible for farmers to repay the loan. Terms of credit also include documentation requirement. Small farmers are not capable of providing complicated paper work. Thus, the terms of credit can be unfavourable for small farmer.