Relationship Lending and Lines of Credit In Small Firm Flnance* I. IntroductIOn * The view:. expre:..;;ed here are our~ dnd do not nece~~ar I\Y reflect those of the BOdrd of Governors of the Federal Reserve or Its staff We thank the plimary editor, Doug 01.1mond, and the dnonymOU'i referee dod second editor for many helpful suggeshon<; that Improved the paper greatly We also thank

We examine the economics of financing small business in private equity and debt markets. Firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle. We show the sources of small business finance, and how capital structure varies with firm size and age. The interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research.

No abstract

We examine the economics of financing small business in private equity and debt markets. Firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle. We show the sources of small business finance, and how capital structure varies with firm size and age. The interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research.

No abstract