Financing the Small Firm Start-Up: Determinants of Debt Use

Frederick C. Scherr, Timothy F. Sugrue and Janice B. Ward
Additional contact information
Frederick C. Scherr: West Virginia University
Timothy F. Sugrue: George Mason University
Janice B. Ward: West Virginia University

Journal of Entrepreneurial Finance, 1993, vol. 3, issue 1, 17-36

Abstract: While academic research concerning capital structure of large corporations has been abundant in the finance literature, studies of small firms have been somewhat less common, and investigation of capital structure at origin (start-up) has been virtually nil. In this paper we present empirical evidence concerning the start-up capital structures of small firms. We base this investigation upon characteristics of both owner and firm. We find the percent of the owner's income expected to be derived from the business to be positively associated with debt use and the owner's age to be negatively associated with debt use. We find that more debt is obtained if the business owner is married and less if he or she is black. Similarly, more debt is prevalent among start-up firms in transportation and utilities than those in other industries. When debt obtained from other than financial institutions is considered, factors such as gender, experience, education, and expected firm size also play a role in the structure of start-up capital.

Keywords: Financing; Small Firm; Small Business; Startup; Debt; Lending (search for similar items in EconPapers)
JEL-codes: G32 L25 M13 (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
http://jefsite.org/RePEc/pep/journl/jef-1993-03-1-b-scherr.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:3:y:1993:i:1:p:17-36

Access Statistics for this article

More articles in Journal of Entrepreneurial Finance from Pepperdine University, Graziadio School of Business and Management Contact information at EDIRC.
Bibliographic data for series maintained by Craig Everett ().