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Small Business Financing: Survey Evidence in West Texas

Author

Listed:
  • Wei He

    (University of Texas of the Permian Basin)

  • H. Kent Baker

    (American University)

Abstract

We investigate the financial sources of small firms through a survey of sample firms from West Texas. Evidence shows that the two most common start-up financing alternatives are personal savings and commercial bank loans. Commercial banks remain the most popular source of financing for present and future needs, followed by leasing companies and credit unions. Informal types of financing such as business credit cards, and trade credit are used in addition to lines of credit for transaction and working capital purposes. Firms typically review their financial performance monthly and use common cash balances as the primary financial tool.

Suggested Citation

  • Wei He & H. Kent Baker, 2007. "Small Business Financing: Survey Evidence in West Texas," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 12(1), pages 27-54, Spring.
    • Handle: RePEc:pep:journl:v:12:y:2007:i:1:p:27-54
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    References listed on IDEAS

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    Cited by:

    1. Mohamed A. Elbannan & Omar Farooq, 2020. "Do more financing obstacles trigger tax avoidance behavior? Evidence from Indian SMEs," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(1), pages 161-178, January.
    2. Lisa-Marie Schröder & Vito Bobek & Tatjana Horvat, 2021. "Determinants of Success of Businesses of Female Entrepreneurs in Taiwan," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    3. Rose Jestina Katabi, Romanus Dimoso, 2018. "Relationship Between SMEs Sources of Funds and Investment Evaluation Techniques," Business and Management Studies, Redfame publishing, vol. 4(4), pages 61-70, December.
    4. Kent Baker, H. & Kumar, Satish & Rao, Purnima, 2020. "Financing preferences and practices of Indian SMEs," Global Finance Journal, Elsevier, vol. 43(C).

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    More about this item

    Keywords

    Funding Sources; startup; small business; commercial bank; leasing; credit unions; trade credit;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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