Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264410 
Year of Publication: 
2019
Citation: 
[Journal:] The Journal of Entrepreneurial Finance (JEF) [ISSN:] 2373-1761 [Volume:] 21 [Issue:] 2 [Year:] 2019 [Pages:] 99-136
Publisher: 
Pepperdine University, Graziadio School of Business and Management and The Academy of Entrepreneurial Finance (AEF), Malibu, CA and Los Angeles, CA
Abstract: 
We test whether rural versus urban location, and the amount of social capital present in those locations, influence the performance of Small Business Administration (SBA) 7(a) loans originated between 1984 and 2012. On average, we find that rural loans are about 11% less likely to default than urban loans, and that a standard deviation increase in social capital reduces default by about 5%. Surprisingly, these two effects are largely independent of each other, even though social capital is substantially higher in rural places than in urban places. Our findings advance the small business lending literature and offer insights for a more efficient allocation of SBA funds.
Subjects: 
Commercial banks
Rural lending
Small business loans
Social capital
SBA
JEL: 
G21
R0
G28
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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