Along with many other economists, I have long argued that entrepreneurial activity is a key driver of economic development, and recently, I completed an economic impact study of LiftFund that provides a bit more evidence in support of this idea. “For more than 21 years, LiftFund, a 502(c)(3) nonprofit organization, has helped individuals achieve the American Dream by providing small business loans to those who do not have access to capital from typical lending sources, such as traditional banks” (Source: http://www.liftfund.com/about/). The study analyzed the impacts across their markets in Texas and Louisiana from 2010 through 2015. Along with the direct effects of the LiftFund lending, the analysis also took into account the multiplier effects, but the impacts for a specific business are only counted in the year in which the new jobs were created (i.e., the impacts were cumulative into the future years).
Here is a summary of the results showing the rather substantial impacts that LiftFund and the small businesses they fund are having on their local economies.
In Texas, LiftFund issued $104 million in loans during this time period, and the loans to these businesses supported 10,758 jobs and earned incomes of $500 million. These businesses produced output valued at $1.4 billion. This means that for each dollar loaned by LiftFund, $13.21 in output was created in the local economy.
In Louisiana, loan volume during this period amounted to $10.6 million. This supported employment of 1,495 earning incomes of $70 million. The businesses impacted by this LiftFund support generated $181 million in output resulting in a return of $17.03 in output per dollar loaned in Louisiana.