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An Examination Of Small Firm Bootstrap Financing And Use Of Debt

Author

Listed:
  • LYNN NEELY

    (Department of Management, BH245V Barsema Hall, Northern Illinois University DeKalb, Illinois 60115, USA)

  • HOWARD VAN AUKEN

    (Department of Management, 3363 Gerdin, Iowa State University, Ames, Iowa 50011, USA)

Abstract

This study examines the relationships between entrepreneurs' use of bootstrap financing methods and access to short- and long-term debt capital. By providing additional funding options, bootstrap financing helps alleviate liquidity issues by providing small firms additional sources of capital when more traditional sources are not accessible. Capital constraints can result in firms being unable to successfully compete and often lead to difficulties associated with liquidity constraints. The findings show that use of short- and long-term debt capital is directly associated with the use of bootstrap financing sources. The growing body of research is demonstrating that bootstrap financing is commonly used, but is related to the use of debt capital. These findings contribute to the growing body of research on small firm use of bootstrap financing and can be used by owners of small firms, consultants and educators. Programs that provide educational assistance to owners of small firms, including university courses and practitioner seminars/workshops, can expand the coverage of bootstrap financing in the curriculum.

Suggested Citation

  • Lynn Neely & Howard Van Auken, 2012. "An Examination Of Small Firm Bootstrap Financing And Use Of Debt," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-12.
    • Handle: RePEc:wsi:jdexxx:v:17:y:2012:i:01:n:s1084946712500021
    DOI: 10.1142/S1084946712500021
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    Cited by:

    1. Joanna Błach & Monika Wieczorek-Kosmala & Joanna Trzęsiok, 2020. "Innovation in SMEs and Financing Mix," JRFM, MDPI, vol. 13(9), pages 1-19, September.
    2. Min Bai & Samir Harith, 2023. "Measuring SMEs Risk – Evidence from Malaysia," SN Business & Economics, Springer, vol. 3(7), pages 1-32, July.
    3. Tin Horvatinovic & Mihaela Mikic & Marina Dabić, 2023. "Dissecting entrepreneurial team research: a bibliometric analysis," Review of Managerial Science, Springer, vol. 17(8), pages 2973-3011, November.
    4. Inessa Love, 2020. "Entrepreneurial Access to Finance in the US," Working Papers 202004, University of Hawaii at Manoa, Department of Economics.
    5. Iryna Demko & Ana Claudia Sant’Anna, 2023. "Impact of Race, Ethnicity, and Gender on the SBA Paycheck Protection Program (PPP) Loan Amounts," Economic Development Quarterly, , vol. 37(3), pages 211-229, August.

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