Strategies to obtain capital for small businesses in Maryland Business & Finance homework help
What are the strategies small business owners use to obtain a line of credit for Capital
76
Abstract
Strategies to Obtain a Working Capital Line of Credit for Small Businesses
by
Solomon Atamaya
MS, DeVry University, 2014
BS, Kaplan University, 2012
Doctoral Study Submitted in Partial Fulfillment
of the Requirements for the Degree of
Doctor of Business Administration
Walden University
March 2022
Abstract
Strategies to Obtain a Working Capital Line of Credit for Small Businesses
by
Solomon Atamaya
MS, DeVry University, 2014
BS, Kaplan University, 2012
Doctoral Study Submitted in Partial Fulfillment
of the Requirements for the Degree of
Doctor of Business Administration
Walden University
March 2022
Dedication
Acknowledgments
27
Section 1: Foundation of the Study
1
Assumptions, Limitations, and Delimitations
5
Contribution to Effective Practice of Business
7
Contribution to Positive Social Change
8
Review of the Professional and Academic Literature
8
Application to the Applied Business Practice
9
Theory of Discouraged Borrowers
10
Alternative Theories for the Theory of Discouraged Borrowers
13
Analysis of Potential Themes
14
Maryland Small Business Development Financing Authority Programs
22
Information Symmetry in the Lending Process
27
Audited Financial Statements
28
The State of the Economy at the Time of This Study
28
Data Collection Instruments
41
Data Organization Technique
45
Appendix A: Informed Consent Form
75
Appendix B: Interview Protocol
78
v
Section 1: Foundation of the Study
Small businesses account for over 50% of all companies in the United States (U.S. Small Business Administration [SBA], 2018), having a positive effect on gross domestic product (Klimczak et al., 2017). Small businesses are an integral part of the economies of both developed and underdeveloped countries (Karadag, 2015); however, small business owners struggle to stay in operation longer than 5 years (SBA, 2018a). In 2013, 406,353 start-up businesses opened; in the same year, however, 46% of businesses closed (SBA, 2018b). A manager’s ability to acquire working capital could affect business continuity and reduce the failure rate (Leroy et al., 2015). Therefore, all business leaders need to have plans to acquire working capital (Lampadarios, 2016). The purpose of this multiple case study is to explore strategies that small business owners use to obtain a working capital line of credit for business continuity.
More than 500,000 small businesses constitute 97% of businesses in Maryland and employ more than one million people (SBA, 2018b). In 2014, 4,074 new small businesses started in Maryland, and in the same year, 3,730 closed, marking a large percentage of failed small businesses compared to those opened. External funding is necessary for the sustainability and growth of small businesses (Neagu, 2016). Access to financial resources is essential for business leaders to pay for operating expenses, debts, inventory, and business growth. Many business leaders attribute business failures to external factors, although internal management capabilities and approaches significantly impact business sustainability (Eggers & Lin, 2015). Poor management skills and an inability to access finances are the main reasons for business failure (Lee, 2016). Accordingly, I will explore effective Maryland small business owners’ effective strategies to obtain a working capital line of credit for business continuity for 5 years or longer.
Insufficient access to funds, including lines of credit, causes 29% of small businesses to fail within the first 5 years of operation (Shabat, 2019). Small business owners encounter challenges obtaining a working capital line of credit (U.S. Federal Reserve Bank, 2017). The general business problem is that some small business owners cannot access working capital lines of credit, which threatens business survival through liquidity shortages, lost customers, and falling profitability. The specific business problem is that some small business owners lack strategies to obtain a working capital line o
