Why Have Lending Programs Targeting Disadvantaged Small-Business Borrowers Achieved So Little Success in the United States?

Timothy Bates, Magnus Lofstrom and Lisa Servon ()
Additional contact information
Lisa Servon: The New School

No 5212, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Small 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. Our 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, our analysis yields no evidence that financial capital constraints are a significant barrier to small-firm creation.

Keywords: self-employment; entrepreneurship; micro-lending (search for similar items in EconPapers)
JEL-codes: J15 L26 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2010-09
New Economics Papers: this item is included in nep-bec, nep-ent and nep-sbm
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Citations: View citations in EconPapers (3)

Published - published in: Economic Development Quarterly, 2011, 25 (3), 255 - 266

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Journal Article: Why Have Lending Programs Targeting Disadvantaged Small Business Borrowers Achieved So Little Success in the United States? (2011)
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