Answer :

The poor find the process of taking loans from the bank difficult because of lack of proper documents and collateral.

NOTE – Collateral refers to the asset that is owned by the borrower and is used as a guarantee to the lender until the loan is repaid.

Informal sources of loans (moneylenders, relatives, and friends) do not require certain documents and collateral while giving loans and moreover, they are also ready to give fresh loans such without payment of the previous loans.

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