Abstract and Keywords
The availability of credit is one of the most important issues facing small businesses, and is especially vexing for young and fast-growing firms that need new capital to finance growth. In the United States, small businesses produce about half of the total GDP in the U.S., employ about half of all private-sector U.S. workers, and have accounted for almost two-thirds of all job growth between 1993 and 2008. Therefore, it is critically important to understand the issue of credit availability to small firms. This article analyzes data from a series of four nationally representative samples of small U.S. firms conducted by the Federal Reserve Board over two decades. It explores differences in younger and older firms, using ten years as the demarcation point between young and old businesses. Younger firms seeking to grow have different credit needs than older, more mature firms. Many distinguish entrepreneurial firms from other small firms by their age. The article briefly describes the Surveys for Small Business Finances (SSBFs); summarizes two sets of studies that use the SSBFs to analyze the use of credit by small firms; and presents new evidence from the SSBFs on differences between young and old small firms, with a focus on the availability of credit.
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