Browsing School of Business by Subject "access to credit"
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- ItemGrow Modesto Fund: increasing access to capital and training for Modesto’s low-income entrepreneurs(Southern New Hampshire University, 2015) Hofer, Jeremy; Craig, MicheleIn today’s credit-driven and increasingly complex business environment, low income entrepreneurs struggle to obtain the financing they need to startup and grow. Too small to attract investors and business bankers, many don’t know where to turn. Traditional banking standards require at least two (profitable) years in business, strong credit history, and collateral to obtain a loan. Equity investors require quick returns in high growth industries. As a result, many of Modesto California’s microenterprises rely on high interest private loans, credit cards, and payday/title loans to start and grow their operations. Modesto’s non-profit alternative lenders have had difficulty being effective in this environment, as has project host Fresno Community Development Financial Institution (Fresno CDFI). This project aimed to establish a revolving loan fund for micro-entrepreneurs left out of mainstream financial markets through an innovative and collaborative approach that leveraged local partnerships to increase access to capital and technical assistance. After ten months of development, the Grow Modesto Fund was formally announced by Modesto’s Mayor Marsh on August 27, 2015. This paper explores the challenges and successes met by the team that developed the Fund and looks at preliminary indicators of how effective the Fund may be in growing jobs and businesses in Modesto. (Author abstract)
- ItemMinority-owned businesses, trade credit and discrimination : an empirical study of the impact of racial discrimination on access to trade credit for minority-owned vs. non-minority-owned firms(Southern New Hampshire University, 2007) Reese, T. David; Swack, Michael; Karush, Gerald; Buchele, RobertAccess to credit in particular and capital in general is a major determinant of the rate of both the formation and survival of small businesses. During the last thirty years a growing body of theoretical and empirical research has developed that explores how a firm’s access to credit varies by the business owner’s race and/or ethnicity and test specific hypotheses about why these variations might occur. The overwhelming majority of empirical studies show that on average African-American and Hispanic borrowers receive credit in amounts and on terms less favorable than those obtained by non-minority borrowers. Much of this research asks, "does racial discrimination in part account for the observed disparities in credit outcomes for various racial and ethnic groups?" While numerous studies have tested for the existence of discrimination in commercial bank lending to firms, to date, this author has found only two empirical studies that explore how access to trade credit varies with the race and/or ethnicity of a firm’s owner. This study begins the process of addressing this gap in the literature. This study explores if and how the amount of trade credit obtained by small businesses varies by the owner’s race and/or ethnicity. Our findings clearly shows that firms owned by African-American men, Hispanic white men and Asian-Americans on average receive significantly lower levels of trade credit relative to those owned by non-Hispanic white men. After controlling for industry, the owner’s human capital, the creditworthiness of the firm and the firm’s owner, this study finds no statistically significant evidence that the race/ethnicity of a firm’s owner explains the observed disparity in the levels of trade credit provided to firms owned by Hispanic whites and African-Americans. For firms owned by Asian-Americans, this study does find statistically significant evidence that race explains in part the observed disparities after controlling for industry, the owner’s human capital, the creditworthiness of the firm and the firm’s owner. This finding is noteworthy because many scholars suggest that Asian-Americans do not experience difficulties in accessing credit comparable to those experienced by other minorities. (Author abstract)