Have Finance Companies Gained Shares in the Small Business Loan Market During the 1990s : Evidence from the 1993 and 1998 Surveys of Small Business

Although finance companies experienced growth in their owned and securitized receivables during the 1990s, it appears that this growth was not the result of increased involvement with small businesses.This study investigates the importance to small businesses of finance companies and other lending agencies, and assesses any changes in small business borrowing behaviors. Data on the financing sources of small businesses is used from 1993 and 1998 Surveys of Small Business Finances (SSBF). The 1993 sample (n=4638) and the 1998 sample (n=3561) are both adjusted for inflation as reported by the U.S. Department of Labor.The data are analyzed using descriptive statistics and other linear and non-linear statistics. The results indicate that small business borrowers are more likely to seek loans from finance companies only for leases and mortgage loans.Overall, the findings indicate that small business's involvement with finance companies has remained virtually unchanged from 1993 to 1998.Commercial banks, while providing for about the same amount of small businesses between 1993 and 1998, were providing larger sums of money to small businesses.(AKP)