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Rural business programs and business performance: The impact of the USDA's Business and Industry (B&I) Guaranteed Loan Program

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  • Anil Rupasingha
  • Daniel Crown
  • John Pender

Abstract

The USDA's Rural Development (RD) has implemented several loan and grant programs to support businesses located in rural areas and the Business and Industry (B&I) Guaranteed Loan Program is the largest among them. The focus of the present study is to estimate the impact of B&I program participation and the amount of loans received on the probability of survival and employment growth of recipient businesses over the period of 1990–2013. Using administrative data on B&I loans from RD and business‐level data from the National Establishment Time‐Series (NETS), we utilize a matched difference‐in‐difference estimation strategy to assess the impact of the B&I program on establishment‐level outcomes. We find that the receipt of a B&I loan helps recipient businesses to reduce the risk of failure and grow slightly faster, compared with a similar control group of businesses. We also test if the impacts vary with the loan size and find that while increasing the size of loans has an increasing effect to reduce the risk of failure, it shows no statistically significant effect on employment growth.

Suggested Citation

  • Anil Rupasingha & Daniel Crown & John Pender, 2019. "Rural business programs and business performance: The impact of the USDA's Business and Industry (B&I) Guaranteed Loan Program," Journal of Regional Science, Wiley Blackwell, vol. 59(4), pages 701-722, September.
    • Handle: RePEc:bla:jregsc:v:59:y:2019:i:4:p:701-722
    DOI: 10.1111/jors.12421
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    Cited by:

    1. Bednarik, Zuzana & Marshall, Maria I., 2023. "Rural small business loan access and their adaptive capacity in times of crisis," 2023 Annual Meeting, July 23-25, Washington D.C. 335449, Agricultural and Applied Economics Association.
    2. Bertoni, Fabio & Colombo, Massimo G. & Quas, Anita, 2023. "The long-term effects of loan guarantees on SME performance," Journal of Corporate Finance, Elsevier, vol. 80(C).

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