Start-Up Financing, Owner Characteristics and Survival

T. B. ASTEBRO, I. Bernhardt

Journal of Economics and Business

July-August 2003, vol. 55, n°4, pp.303-320

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: Bank loans, Start-up business survival, Forecast

We investigated the relation between the survival of new small businesses and bank loans. This was done using a model that included other loan sources, human capital variables, and company and industry descriptors. We found there is a negative correlation between having a bank loan and business survival, and a positive correlation between having a non-bank loan and survival. However, having a bank loan was a ceteris paribus positive predictor of the survival of start-up companies. Our findings enabled some inferences about the process of loan source selection by start-up business owners, and about the banks’ loan granting process.