Where does start-up capital come from?
Typically, the modest capital demands, particularly for microenterprises, are often met by the savings of the entrepreneur or his or her family and friends or by credit cards. Even the nation s most successful firms, those whose growth rates warrant an appearance on the annual Inc. 500 list compiled by Inc. magazine, relied heavily on their own savings and the support of family and friends. Among CEO s of 1997 Inc. 500 firms, 79 percent reported using personal savings, 16 percent also looked to family and 7 percent to friends; credit cards provided capital for 10 percent of the group.(3) Credit cards help keep many small businesses afloat, providing access to capital and goods for 39 percent of owners who reported using personal credit cards and 28 percent who used business credit cards in 1993. Among the smallest firms, those with fewer than 10 employees, 40 percent of business owners used credit cards, compared with 23 percent of larger firms, those with 50 or more employees.(4) In K
