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.
An underfunded enterprise may encounter challenges in meeting its current operational costs because of a lack of capital, potentially leading to bankruptcy; it might also be overly exposed to risk. Alternatively, while the business is financially sound, it may not have sufficient funds to expand and meet market demands.