(a) Normally, small formers have no collateral to pledge against loans. Since forming is a high risk activity, banks are unwilling to lend to small burners.
(b) Small farmers can take loans from cooperatives, SHGs (if they are members) or informal sector credit sources like moneylenders, traders, relatives, friends, etc.
(c) An example of unfavourable terms ofcredit is given below
Shiva is a small former who borrows money at the rate of 4% per month (i.e. 48% per annum) from a local moneylender to grow his crop.
The crop foils due to a severe drought. As a result, Shiva has to sell part of his land to repay the loan. Thus, his condition becomes worse than before.
(d) Small formers can get cheap credit from sources like regional rural banks, agricultural cooperatives, SHGs, etc.