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Abstract

The 1998 Survey of Small Business Finances provides robust information on the financing of small businesses including an overview of their firm’s organization, financial characteristics, and credit use. Information from the survey is used in this study to compare the financial characteristics of metro and rural small businesses. While many financial characteristics are similar, rural small businesses do own more land and depreciable assets, and have lower inventory and other current assets when compared with urban firms. Rural firms have relatively similar access to technology and financial services, although utilization varies. Both metro and rural small businesses rely on a wide variety of sources for financing, although rural small businesses have significantly more mortgages, loans from shareholders, and other types of loans, but fewer credit cards. Nonparametric rank order statistical methods were required because normality assumptions were violated due to asymmetric distribution of small firms.

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