Capital Availability for Small Businesses with Dual-Use Applications
Abstract
The defense drawdown is causing a contraction in the defense industrial base. The impact will vary among regions of the country and among industries. Defense-oriented contractors will need capital to convert to commercial work. Depending on where the company is in its conversion effort, it may need financing to conclude product development or modification, to purchase or modify plant and equipment, to develop a marketing and sales staff, or to support higher levels of inventory and receivables. In the current situation, the small business community is concerned that it may be hurt disproportionately because it will be unable to obtain capital for converting products, processes, and technologies with dual-use applications to remain competitive in commercial markets. On the basis of available studies of small businesses in general, it appears that 15 to 30 percent of small businesses have difficulty obtaining capital. Among defense-oriented small businesses we polled, 28 percent of the respondents said that lack of access to capital was hindering their conversion efforts. Without specific information on each company's situation, it is impossible to determine whether the difficulty results from a market failure or simply from an efficient capital market rationing the available supply to the best use. We also found that many defense-oriented small businesses are having trouble dealing with commercial markets. Many report that they are finding it hard to identify markets and to establish commercial channels of distribution. Those companies reporting difficulty in obtaining capital indicate that the most pressing need is for capital for marketing and promotional activities. Dual use, Dual use applications, Capital, Capital availability, Financing, Loan guarantees.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 1994
- Accession Number
- ADA285901
Entities
People
- Craig A. Webster
- Donna J. Peterson
- Eric L. Gentsch
- Myron G. Myers
Organizations
- LMI