Access to Capital in Appalachia

An excellent new study from the Appalachian Regional Commission highlights the ongoing entrepreneurial renaissance underway across Appalachia.  Access to Capital and Credit for Small Businesses and Entrepreneurs in Appalachia examines the recent experiences of the region’s entrepreneurs seeking capital for business operations and growth.  Let’s start with the good news.  Entrepreneurship is alive and well in Appalachia, with new business starts up 57% when compared with 2019 numbers.  However, most of these firms remain quite small and the lion’s share of firms are sole proprietorships or microenterprises with less than ten employees.  The study identifies a mismatch between these firms and capital sources in the region.  Banks dominate the business finance landscape, with limited access to angel or venture capital.   These small firms need smaller capital infusions, typically in the $100-$250K range, or even very small microloans of under $10,000. Loans of this size can be difficult to access., especially from traditional bank lenders.  The report concludes with an excellent series of recommendations for developing new sources of capital, building more capital-ready businesses, and for further supporting the ongoing boom in small business starts across Appalachia.  If you’re looking for related background material, we also recommend the 2018 project (led by EntreWorks Consulting), Entrepreneurial Ecosystems in Appalachia.