An Empirical Investigation on Loan Applications and Fear of Rejection of External Financing in the Foodservice Industry

Keywords

External financing, fear of rejection, loan application, small business finances, small-cap foodservice firms

Abstract

This article examines the loan application decision patterns of small-cap foodservice firms and the causes of these firms' discouragement (fear of rejection) in relation to their external finance-seeking efforts. We utilize information and data collected by the Survey of Small Business Finances on a variety of aspects related to small-cap foodservice firm owners and firms, including market-lender characteristics, use of financial services, and income and balance sheet information in the United States. Our primary findings reveal that sufficient liquidity and owner net worth reduce external finance seeking. In addition, firm credit quality and owner minority status increase discouragement toward external finance seeking, while education reduces fear of rejection.

Publication Date

1-1-2018

Number of Pages

462-481

Document Type

Article

Language

English

Source Title

Journal of Foodservice Business Research

Volume

21

Issue

4

College

Rosen College of Hospitality Management

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