MEDIA RELEASE: 28 February 2018 – R00040
One of the first things entrepreneurs worry about is how to secure funding for their business ideas. Some go the traditional route and borrow from a bank, while others look to personal credit cards or loans from family and friends.
However, new research from Brock University shows that the type of loan goes a long way in predicting a new startup’s success.
In the first research study of its kind, Tatyana Sokolyk, Associate Professor of Finance at Brock’s Goodman School of Business, along with her co-author, Professor Rebel Cole from Florida Atlantic University, studied the financial performance of more than 4,000 startups to find out which type of loan was most closely related to the company’s success.
They found companies that secure business loans in the company’s name generate more than four times the revenue than those which fund their business by personal debt.
“We teach that it is critical for companies to have access to financial capital while they focus on building their venture, but until now, the research in this area had not differentiated capital types,” Sokolyk says.
“Banks choose what startups to extend loans to, and their due diligence and monitoring can help the startups to be more successful, but only where the entrepreneur has taken the time to apply for a business loan.”
Sokolyk is available to comment on:
- How entrepreneurs should seek funding to increase success
- How and why companies’ success (revenue growth and survival) is linked to the type of funding it receives in their early stages
- The difference between business lending and personal lending
- Why it’s important for entrepreneurs to have a high level of business financial literacy
For more information or for assistance arranging interviews:
* Dan Dakin, Media Relations Officer, Brock University ddakin@brocku.ca, 905-688-5550 x5353 or 905-347-1970
Brock University Marketing and Communications has a full-service studio where we can provide high definition video and broadcast-quality audio.
– 30 –
