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Rural Small Business Finance: Evidence From The 1998 Survey Of Small Business Finances

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  • Gustafson, Cole R.

Abstract

The 1998 Survey of Small Business Finances provides robust information on the financing of small businesses including an overview of their firm's organization, financial characteristics, and credit use. Information from the survey is used in this study to compare the financial characteristics of urban and rural small businesses. Overall, rural small businesses have very similar financial characteristics, access to technology and financial services, sources of financial capital, and creditworthiness when compared to urban small businesses. Nonparametric rank order statistical methods were required when comparing dollar values of urban and rural small businesses because normality assumptions were violated due to the high concentration of small firms. On average, rural and urban small businesses were strong financially and profitable. Accounts receivable and inventory comprise nearly a third of total assets. Most were organized as either sole proprietorships or corporations. The majority of small businesses utilized computers, primarily for accounting/bookkeeping, administration, and email. Primary financial services are used for transactions and trade credit. Two-thirds of purchases involve trade credit from more than 20 trade credit suppliers, on average. Both urban and rural small businesses rely on a wide variety of sources for financing and use each to the same degree. Rural small businesses possess higher creditworthiness, but nearly one-fourth still report being delinquent on business obligations.

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Bibliographic Info

Paper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Statistical Series Reports with number 23674.

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Date of creation: 2003
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Handle: RePEc:ags:nddssr:23674

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Keywords: rural; small; business; finances; survey; Community/Rural/Urban Development;

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  1. Holmes, Marionette & Park, Timothy A., 2000. "Portfolio Decisions Of Small Agribusinesses: Evidence From The 1993 National Survey Of Small Business Finance," 2000 Annual meeting, July 30-August 2, Tampa, FL 21848, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Marianne P. Bitler & Alicia M. Robb & John D. Wolken, 2001. "Financial services used by small businesses: evidence from the 1998 survey of small business finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Apr, pages 183-205.
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