The Challenges of Small Business The growth of small and medium-sized businesses in Canada and other developed countries has been very significant. This sector of the business community now accounts for approximately 40% of GDP and accounts for more than half of total employment. Small businesses today are more diverse and more vigorous than ever, but they also face new and greater challenges or obstacles to their growth than their older counterparts. This research will attempt to find the answer to the following hypothetical question: “What are the barriers to entry, inhibitors to growth, and harms to the health of small businesses and entrepreneurship today?” Access to capital and credit at various stages of the business life cycle is identified as the main obstacle by entrepreneurs. For many small businesses and most start-ups, entrepreneurs' and entrepreneurs' personal funds and those of relatives and acquaintances constitute the main source of capital. For many small businesses, especially during the first few years of operation, credit is simply not available. For many others, the limited credit available is not through bank loans. For this reason, many of them rely on multiple credit card balances and home equity loans as their main sources of credit for startups. Because banks are bound by laws and regulations to prudent lending standards that require them to carry out a risk management assessment for every loan they make. These regulations were made more vigorous in the late 1980s and early 1990s. Banks have always found that lending to manufacturing businesses with durable assets such as property, equipment and inventory has always been easier than lending to companies in today's growing service sector. Since service sector companies have few resources, loan judgment must be based in terms of character, markets and cash flow, which makes it difficult for the bank to meet loan approval regulations. Furthermore, the banking sector, as well as the entire financial sector of the economy, is experiencing rapid change. In the future the banking sector will be divided into global, national and super-regional banks and a much smaller number of community banks. These banks, especially super-regional and community ones, are expected to extend their services to the needs of small businesses through large loan processing centers that use credit scoring techniques and "smart models" (computer models derived from artificial intelligence) .