Why is lending to, or investing in a small firm difficult ? (45 marks)

When addressing this question, please critically discuss the factors that may contribute to the emergence of the funding gap concerning Small firms, and whether the funding gap can be eliminated. It is important to identify and explain the factors that differentiate smaller firms from large, established firms in their finance acquisition. Please support your arguments with theoretical frameworks on Small enterprises finance and types of investors.

Please use the three key sources of finance for small firms in the answer: equity financing, crowd funding, debt finance. these should finally link to the funding gap through out the question.