ABSTRACT
Many small and medium-size businesses suffer from undercapitalization and/or poor management of fi nancial resources, often during the fi rst few years of operation. The entrepreneur typically either overestimates demand for the product or severely underestimates the need for capital resources and organizational skills. Undercapitalization may also be a result of the entrepreneur’s aversion to equity fi nancing (fear of loss of control over the business) or the lender’s reluctance to provide capital due to the entrepreneur’s lack of credit history and a comprehensive business plan (Gardner, 1994; Hanks, Barnett, Durden, and Woodrum, 2011; Hutchinson, 1995).
