The Financing Preferences of Immigrant Small Business Owners in South Africa

Abstract

Access to financial resources is very important to the survival and growth of immigrant-owned businesses. The objective of this study was to investigate the sources of finance used by immigrant entrepreneurs during the start-up and established phases of their businesses. The survey was conducted in the Johannesburg Central Business District in the Gauteng province of South Africa. The study used the qualitative research technique. In-depth interview method was used for data collection. The results indicated that the major sources of finance for immigrant entrepreneurs during the start-up phase are owners’ contribution, family and friends. These sources of finance can be categorised as informal, ethnic sources of finance. The use of debt finance from commercial banks, suppliers and government agencies is very limited. During the established stage, immigrant entrepreneurs use a combination of internal equity and debt. Some immigrant entrepreneurs are able to obtain credit from suppliers and commercial banks during the established stage. The financial support from family and friends seems to decline as immigrant entrepreneurs become established.

DOI: 10.5901/mjss.2014.v5n20p184