Why Have Lending Programs Targeting Disadvantaged Small Business Borrowers Achieved So Little Success in the United States?
AbstractSmall business lending programs designed to move disadvantaged low-income people into business ownership have been difficult to implement successfully in the U.S. context. Based in part on the premise that financing requirements are an entry barrier limiting the ability of aspiring entrepreneurs to create small businesses, these programs are designed to alleviate such barriers for low net-worth individuals with limited borrowing opportunities. The authors’ analysis tracks through time nationally representative samples of adults to investigate the role of financial constraints and other factors delineating self-employment entrants from nonentrants. Paying particular attention to lines of business most accessible to adults lacking college credentials and substantial personal net worth, the authors’ analysis yields no evidence that financial capital constraints are a significant barrier to small-firm creation.
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Bibliographic InfoArticle provided by in its journal Economic Development Quarterly.
Volume (Year): 25 (2011)
Issue (Month): 3 (August)
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Other versions of this item:
- Bates, Timothy & Lofstrom, Magnus & Servon, Lisa, 2010. "Why Have Lending Programs Targeting Disadvantaged Small-Business Borrowers Achieved So Little Success in the United States?," IZA Discussion Papers 5212, Institute for the Study of Labor (IZA).
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
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