Sources of Capital for Small Family-Owned Businesses

Securing adequate capital is an ongoing challenge for many small family-owned businesses. This article uses data from the 1993 National Survey of Small Business Finances to determine the extent to which small family-owned firms use various types of credit products. Using logistic regression, it also identifies variables that predict the likelihood of using credit. Findings reveal that size, age, and profitability of the firm were the most important predictors. Results also indicate that there were virtually no differences between family-owned and nonfamily-owned businesses in the usage of various credit products.