Building close ties with creditors boosts financing availability for small businesses.
This study looked at how relationships between small businesses and their lenders affect the availability and cost of funds. By analyzing data from a survey of small firms, the researchers found that having close ties with a single lender increases the availability of financing. However, borrowing from multiple lenders can lead to higher costs and less available credit. Overall, having strong relationships with lenders is important for getting more funds, with the focus being on the quantity of credit rather than the price.