Which source of funding is most commonly used to start new businesses?

• A. Bank loans
• B. Personal savings of the founders
• C. Venture capital
• D. Government grants

Answer: (B)

Verified step by step guidance

1. Understand the context of the question: The problem is asking about the most common source of funding for starting new businesses. This requires knowledge of typical funding sources and their prevalence.
2. Review the options provided: Bank loans, personal savings of the founders, venture capital, and government grants. Each option represents a different funding source with varying levels of accessibility and frequency of use.
3. Analyze the characteristics of each funding source: Personal savings are often the most accessible and commonly used because they do not require external approval or repayment terms. Bank loans require creditworthiness and collateral, venture capital is typically reserved for high-growth potential businesses, and government grants are limited and competitive.
4. Consider statistical and practical evidence: Studies and surveys often show that personal savings are the primary source of funding for most new businesses, as founders rely on their own resources to minimize risk and avoid external obligations.
5. Conclude that the correct answer is based on the prevalence and accessibility of personal savings compared to other funding sources, making it the most common choice for new business startups.