Abstract
In times of crisis, investment in entrepreneurial ventures tends to decline. Early data suggest the decline in small business investments due to the pandemic will be historic in scope and depth. Community development lending practices aim to sustain small firms until they can resume their normal course of business. Affordable financing provides capital injections into small businesses which can help to cushion against COVID-19 induced economic shocks. Using Carolina Small Business Development Fund’s lending data as a case study, this analysis considers the effect of COVID-19 response programs. These activities are oriented towards creating a “social safety net” of Main Street businesses that boost social capital development, community trust, and financial stability. We believe the findings are likely generalizable to lending activities by other community development financial institutions.
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