abstract:Under-capitalization refers to any situation where a business cannot acquire the funds they need. An under-capitalized business may be one that cannot afford current operational expenses due to a lack of capital, which can trigger bankruptcy, may be one that is over-exposed to risk, or may be one that is financially sound but does not have the funds required to expand to meet market demand.
You solve the problem of undercapitalization by you directly provide a capital stake to the banks in exchange for ownership, essentially what Warren Buffett did with Goldman Sachs.