The financing preferences of small firm owners

Small owner‐managed firms typically operate with levels of debt, much of it short‐term, which are higher than those found in large companies. This paper investigates the financing preferences of a cross‐section of small firm owners. The findings support the view that the financing decisions of small firm owners are based on a demand‐side packing order of finance types. The resulting financial structures reflect a desire to minimise intrusion into the firms and are not entirely the consequence of persistent deficiencies in the provision of finance to small firms.