Financing new venture exporters

Abstract

This paper investigates the demand for, and access to, financing for young small and mediumsized enterprises (SMEs). The work compares, theoretically and empirically, two sets of new firmsthose that export and those that do not export-as to the frequency with which they seek and obtain external financing. The work hypothesizes that new growth firms and new exporter firms are especially likely to seek external financing yet less likely to obtain financing. Empirical findings confirm these expectations, demonstrating that young growth firms were more likely than non-growth firms to seek all forms of capital and exporters were particularly likely to apply for equity and trade credit. Commercial lenders were less likely to approve loan applications from early stage growth firms, and especially so for applications from young, growth-oriented SME exporters. The implications of these results for research and public policy are discussed.

SME innovation, exporting and growth: A review of existing evidence

“…Acquiring such capital does, of course, depend on the accessibility of investment finance which may be a particular issue for young innovative SMEs, particularly where these firms are also seeking to export. In Canada, for example, there is some evidence that SMEs which were growth oriented and which were seeking to export had a particularly high turndown rate when seeking external finance, perhaps due to perceived risk (Riding et al 2012). …”

“…There is also some more specific evidence from Canada which suggests that SMEs which are seeking to innovate and/or export are likely to experience higher turn-down rates when applying for loan finance than other SMEs (Riding et al 2012). Evidence on this point is limited in the UK.…”

The Relationship between the Risk of a Change of the Interest Rate and the Age of Entrepreneurs among Slovak SMEs

“…Their access to bank credit is worsened and this fact has an impact on their growth (Dong and Men, 2014). The relation between the age and the credit risk was proved in the studies of Bougheas et al (2006), Pickernell et al (2011 and Riding et al (2012). According to their results, younger entrepreneurs more intensively face the credit risk than older ones.…”

“…They bring evidence that younger firms face the financial and credit risk more intensively than older and larger firms. The authors Lazányi (2014), Dong and Men (2014), Bougheas et al (2006), Pickernell et al (2011) and Riding et al (2012 present the opinion that younger entrepreneurs the credit risk and interest rate risk more intensively than older ones. Younger entrepreneurs pay higher interest rates because they are of a smaller firm size and their liquidity to pay in time is lower than of the older entrepreneurs.…”

“…Their small size is according to such authors as Steinerowska-Streb and Steiner (2014), Irwin and Scott (2010), Mercieca et al (2009), Belás (2015b), Dong and Men (2014), Cheng, Tang and Shi (2012) often a reason why they more intensively face the financial risk and also the credit risk. Also Vos et al (2007), Bottazzi et al (2014), Lazányi (2014), Oliveira and Fortunato (2006), Dong and Men (2014), Hernández-Cánovas and Martínez-Solano (2010), Bougheas et al (2006), Pickernell et al (2011), Riding et al (2012) declare that the credit risk is higher in the group of younger entrepreneurs. The aim of this paper is to prove by the statistical method that the age of entrepreneurs (SMEs) should be considered as a relevant factor with the significant impact on the intense of credit risk in general, and its part -the risk of a change of the interest rate -in particular in Slovakia.…”