Research
Access to Capital for Small Businesses in Appalachia
Executive Insights on Closing the $70B Capital Gap and Unlocking Regional Growth
Research Report by Next Street, with support from the Appalachian Regional Commission
Executive Summary
Small businesses are the backbone of the Appalachian economy—representing over 99% of all businesses and driving economic vitality across the region. Yet despite their importance, many entrepreneurs face persistent barriers to accessing the capital and credit needed to start, grow, and sustain their businesses.
This report with support from The Appalachian Regional Commission and developed by Next Street provides a comprehensive analysis of the Appalachian small business and capital ecosystem, quantifying the gap between supply and demand, identifying systemic barriers, and outlining actionable strategies to strengthen access to capital at scale.
The Core Challenge: A Structural Capital Gap
While demand for capital continues to grow, supply has not kept pace.
$117B–$127B in annual capital demand
~$70B average annual shortfall in unmet need
Capital heavily concentrated among traditional banks
Limited access to alternative and flexible financing
Top Line Takeaways
1. Small Businesses Power the Economy—But Face Barriers
Economic Impact: Over 2 million small businesses operate across Appalachia, driving job creation and sustaining local economies and communities.
Structural Challenge: The majority are microbusinesses or non-employer firms, often lacking the scale, resources, and support needed to grow.
2. Capital Access Is Uneven and Constrained
Geographic Disparities: Capital is concentrated in metro areas, leaving rural communities with limited access to lenders and financial institutions.
Access Decline: Bank branch locations have declined by ~2.3% annually, further reducing access to capital across the region.
3. Financial Products Don’t Match Business Needs
Funding Gaps: Significant gaps exist in financing between $100K–$250K, limiting growth for scaling businesses.
Product Mismatch: Shortages in microloans under $50K—especially under $10K—combined with rigid underwriting standards, restrict access for many entrepreneurs.
4. Fragmentation Limits Ecosystem Performance
Coordination Gaps: Weak alignment between lenders, investors, and support organizations reduces efficiency and impact.
Visibility Challenges: Information asymmetry and limited awareness of available resources prevent businesses from accessing the support they need.
5. Growth Opportunities Require Targeted Support
Emerging Sectors: Manufacturing, infrastructure, and clean energy are driving new opportunities across the region.
Unlocking Potential: Increasing entrepreneurial activity signals strong demand—but requires targeted capital, services, and ecosystem coordination to scale.
Download the Full Report
Get the complete insights, data, and recommendations
Access the full report to understand the capital landscape, identify gaps, and explore actionable strategies to expand access and drive growth.
Executive Insights on Closing the $70B Capital Gap and Unlocking Regional Growth
Research Report by Next Street, with support from the Appalachian Regional Commission
Executive Summary
Small businesses are the backbone of the Appalachian economy—representing over 99% of all businesses and driving economic vitality across the region. Yet despite their importance, many entrepreneurs face persistent barriers to accessing the capital and credit needed to start, grow, and sustain their businesses.
This report with support from The Appalachian Regional Commission and developed by Next Street provides a comprehensive analysis of the Appalachian small business and capital ecosystem, quantifying the gap between supply and demand, identifying systemic barriers, and outlining actionable strategies to strengthen access to capital at scale.
The Core Challenge: A Structural Capital Gap
While demand for capital continues to grow, supply has not kept pace.
$117B–$127B in annual capital demand
~$70B average annual shortfall in unmet need
Capital heavily concentrated among traditional banks
Limited access to alternative and flexible financing
Top Line Takeaways
1. Small Businesses Power the Economy—But Face Barriers
Economic Impact: Over 2 million small businesses operate across Appalachia, driving job creation and sustaining local economies and communities.
Structural Challenge: The majority are microbusinesses or non-employer firms, often lacking the scale, resources, and support needed to grow.
2. Capital Access Is Uneven and Constrained
Geographic Disparities: Capital is concentrated in metro areas, leaving rural communities with limited access to lenders and financial institutions.
Access Decline: Bank branch locations have declined by ~2.3% annually, further reducing access to capital across the region.
3. Financial Products Don’t Match Business Needs
Funding Gaps: Significant gaps exist in financing between $100K–$250K, limiting growth for scaling businesses.
Product Mismatch: Shortages in microloans under $50K—especially under $10K—combined with rigid underwriting standards, restrict access for many entrepreneurs.
4. Fragmentation Limits Ecosystem Performance
Coordination Gaps: Weak alignment between lenders, investors, and support organizations reduces efficiency and impact.
Visibility Challenges: Information asymmetry and limited awareness of available resources prevent businesses from accessing the support they need.
5. Growth Opportunities Require Targeted Support
Emerging Sectors: Manufacturing, infrastructure, and clean energy are driving new opportunities across the region.
Unlocking Potential: Increasing entrepreneurial activity signals strong demand—but requires targeted capital, services, and ecosystem coordination to scale.
Download the Full Report
Get the complete insights, data, and recommendations
Access the full report to understand the capital landscape, identify gaps, and explore actionable strategies to expand access and drive growth.
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