Financial capital is necessary not only for business formation but also for business survival and expansion: its role is well documented in the literature. While venture capital and IPOs often make the popular press, the fact is most firms are unable to tap into this market. Instead, they depend on owner equity, other private equity, and debt financing. Survey data from the Federal Reserve Board allow an in depth look at the patterns of small business financing in the late nineties. Evidence suggests that debt financing for small businesses was extremely important, especially for young firms.

JEL Codes

G32, M13


Financing, Firm Age, Access to Capital, Small Business, Small Firm