AN EXAMINATION OF SMALL FIRM BOOTSTRAP FINANCING AND USE OF DEBT

Lynn Neely and Howard van Auken
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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

Journal of Developmental Entrepreneurship (JDE), 2012, vol. 17, issue 01, 1-12

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.

Keywords: Bootstrap financing; small firm financing; capital structure; bank lending (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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DOI: 10.1142/S1084946712500021

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