Access to Capital and Credit for Small Businesses in Appalachia

This report provides an assessment of the access to capital and credit for small business in the Appalachian Region. The findings provide reasons to be optimistic about the capacity of the Region to close identified capital and credit gaps, particularly the favorable comparison between Appalachia and the nation on key indicators of lending. In addition, Appalachia has a lending infrastructure that includes about 227 banks and savings and loans with more than $500 billion in assets, and a sector of alternative lending institutions featuring over 100 community development financial institutions (CDFIs). This study also reviewed the role of alternative financial institutions in the Region, including Revolving Loan Funds (RLFs), microenterprise lending programs, community development credit unions and development venture capital funds. Overall, these community development financial institutions placed a strong emphasis on business lending, but were not financed by banks to the same extent as their national peers. Instead, these institutions relied to a much greater degree on capital from government sources.