Read the following passage carefully and answer the questions given after it.
When a small business applies for a loan, the bank traditionally asks for two things: a record of past profits and something valuable to hold as security. Millions of tiny enterprises have neither. A tailor who works from home or a vegetable seller with a handcart may earn a steady income, yet on paper they look like strangers to the bank. As a result, they borrow from moneylenders at rates that eat away most of what they earn.
The spread of digital payments has started to change this picture. Every time a shopkeeper accepts money through a mobile app, a small record is created. Over months, these records build up into a detailed picture of the business: how much it sells, on which days, and how reliably money comes in. Lenders have begun to use such cash-flow data to judge whether a borrower can repay, in place of the paperwork and collateral that informal businesses cannot provide.
Supporters argue that this approach rewards honest effort rather than inherited wealth. A young entrepreneur with no property but a busy stall can now show a lender what she actually earns. Loans can also be smaller and quicker, matched to the rhythm of a business that may need money for only a few weeks before a festival season.
Critics, however, urge caution. Data can be misread, and a business that has a bad month for reasons beyond its control, such as heavy rain, may be unfairly marked as risky. There are also concerns about privacy, since payment records reveal a great deal about a person's life. For the system to earn trust, borrowers must know what information is being used and must be able to correct errors.
Used carefully, cash-flow lending could bring millions of people into the formal financial system. The challenge is to make sure that the same data that opens doors does not quietly close them.
Q1.Why do many tiny enterprises find it difficult to get bank loans, according to the passage?
- They prefer to borrow from relatives
- They refuse to use digital payments
- Banks are not allowed to lend to small businesses
- They lack records of past profits and assets to offer as security
- Their incomes are always irregular
Q2.How do digital payments help lenders, as described in the passage?
- They remove the need to repay loans
- They create records that show how much a business sells and how regularly
- They guarantee that every borrower will repay
- They replace banks with mobile apps
- They allow lenders to seize property quickly
Q3.Which of the following is given as an advantage of cash-flow lending?
- Banks can avoid checking any data
- Interest rates become zero
- Borrowers no longer need any income
- It works only for people who own property
- Loans can be smaller, quicker and timed to a business's needs