Extraordinary Times Call for Extraordinary Measures: Small Business Assistance During the Pandemic

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A 2022 report titled Extraordinary Times Call for Extraordinary Measures: Small Business Assistance During the Pandemic, subtitled A Comparison of Loans and Grants Deployed in NC. It is by Jamie R. McCall, Brittany Bennett Weston, James R. Onorevole, John Carter Roberson and Jamie Andrews of the Carolina Small Business Development Fund and ResilNC. The report states that the two organizations view research as the foundation of their mission and that it reflects a commitment to identify evidence-based solutions to North Carolina's policy challenges. It is a long report, and only its front matter was read.

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Case: Extraordinary Times Call For Extraordinary Measures Small Business Assistance During The Pandemic

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“Extraordinary Times Call for Extraordinary Measures: Small Business Assistance During the Pandemic.” Original at doi.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/extraordinary-times-call-for-extraordinary-measures-small-business-assistance-during-the-pandemic/, SHA-256 eccf9e6daa43a7f084c4261aa7ade4d9c64a22dc99274082df73a7f6efe33ac7.

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EXTRAORDINARY TIMES CALL
FOR EXTRAORDINARY MEASURES:
SMALL BUSINESS ASSISTANCE
DURING THE PANDEMIC

A COMPARISON OF LOANS
AND GRANTS DEPLOYED IN NC

Jamie R. McCall | Vice President, Economic Development Policy
Carolina Small Business Development Fund

Brittany Bennett Weston | Executive Director
ResilNC

James R. Onorevole | Program Associate, Economic Development Policy
Carolina Small Business Development Fund

John Carter Roberson | Research Fellow, Economic Development Policy
Carolina Small Business Development Fund

Jamie Andrews | Research Fellow, Economic Development Policy
Carolina Small Business Development Fund
© 2022 Carolina Small Business Development Fund, ResilNC, and the Authors. All Rights Reserved.

ABOUT THIS REPORT
Carolina Small Business Development Fund and ResilNC view research as the
foundation of our mission to empower and uplift the communities we serve. This
report and brief are reflective of our commitment to identify evidence-based
solutions to North Carolina’s most enduring policy challenges.

ACKNOWLEDGEMENTS
We are grateful to CSBDF’s CEO Kevin Dick, whose advocacy for evidence-based
development policy played a pivotal role in shaping the early stages of this project.
Additionally, we appreciate ongoing guidance from ResilNC’s founders and board
members Talib Graves-Manns, Tara Kenchen, Wilson Lester, and Napoleon Wallace.
Research of this scope is truly a team effort, and we are thankful for the thoughtful
input provided by Michael Eggleston of the Federal Reserve Bank of St. Louis, Lillian
Graning of Live Oak Bank, and Tamra Thetford of CNote. Last but certainly not least,
this work would not be possible without the contributions of CSBDF staff members
Emily Blevins, Darlene Deberry, Diane Lantz, Reginold Jones, Mark Royster, and
Amanda Sorrells.

FOR MORE INFORMATION
Jamie McCall Brittany Bennett Weston
VP, Economic Development Policy Executive Director
Carolina Small Business Development Fund ResilNC
jmccall@carolinasmallbusiness.org brittany@resilnc.org

SUGGESTED CITATION
McCall, Jamie, Weston, Brittany, Onorevole, James, Roberson, John, and Jamie Andrews.
2022. “Extraordinary Times Call for Extraordinary Measures: Use of Loans and Grants
for Small Business Assistance During the COVID-20 Pandemic.” Raleigh, NC and Durham,
NC: Carolina Small Business Development Fund and ResilNC.
doi: 10.46712/extraordinary.times.

Extraordinary Times Call for Extraordinary Measures | doi: 10.46712/Extraordinary.Times
EXECUTIVE SUMMARY 01

OVERVIEW & INTRODUCTION 02

LITERATURE REVIEW 04

METHODOLOGY, & LIMITATIONS 15

FINDINGS AND ANALYSIS 21

CONTENTS
CONCLUSIONS 37

RECOMMENDATIONS 39

REFERENCES 43

APPENDIX I. TABLES 57

APPENDIX II. SURVEY DETAIL 59

The financial losses caused by COVID-19 are At a high level, we find preliminary evidence
extraordinary in scope and have reached into that both grants and loans were important
every part of North Carolina’s small business for small business resiliency. The data suggest
ecosystem. For entrepreneurs, pandemic grant initiatives are better for short-term
recovery will require similarly extraordinary financial stability and are likely to position
levels of assistance. In some ways, the recipients for future financing opportunities.
emergence of the coronavirus resembled a Concurrently, disaster loans are related to
type of natural disaster, and the normal policy higher employment retention and a more
response to such events is emergency loans. favorable business sentiment outlook. The
results also show that while the pandemic’s
But the unprecedented economic fallout economic damage was high across all
also gave rise to new policy innovations. underprivileged communities, in many cases
One novel approach was the widespread the damage disproportionately accrued to
deployment of grant aid to small businesses, Black-owned firms.
an intervention that was unheard of at scale
prior to 2020. Using survey data from 10 We recommend small business support
emergency grant and loan initiatives offered programs, disaster-related and otherwise,
by Carolina Small Business Development prioritize equitable aid distribution across
Fund (CSBDF), we assess the connection BIPOC communities. The need for an
between these interventions and a variety equity- focus is especially important for
of positive community impacts. The results grant assistance as well as interventions that
use an equity lens to better understand how strategically combine loan and grant aid.
the pandemic disproportionately harmed Reflective of their track record of success
BIPOC entrepreneurs and other historically with both the public and philanthropic sectors
marginalized constituencies. throughout the pandemic, CDFIs and other
community entities are ideal partners for
providing this kind of support.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 1
OVERVIEW & INTRODUCTION

Carolina Small Business Development Fund (CSBDF) and ResilNC surveyed 1,261 small
businesses that received pandemic aid from CSBDF between 02/01/20 and 02/01/22. Program
requirements and eligibility for aid were set by funders, but every entrepreneur in North
Carolina qualified for at least one of CSBDF’s 10 different loan and grant interventions across
this period. Our inquiry is designed to assess these initiatives as part of our broader mission to
identify holistic and sustainable ways to help small businesses thrive.

Characteristics of Recipients

Are there notable differences in the characteristics of aid recipients based on whether
the firm was awarded a loan, grant, or both types of assistance?

Short-Term Impact from Interventions

What are the short-term outputs and outcomes of these programs, and does
performance on these metrics vary across the type of aid received? Outputs refers to
what occurs immediately after an activity or intervention.1 In contrast, outcomes are
changes at the community level that enhance socioeconomic wellbeing (Bagnoli & Megali,
2011; Becker & Vanclay, 2003b; Gertler et al., 2016; Vanclay, 2003).

Differences Across High Need Populations

Do the data show differential impacts for recipients from historically marginalized
constituencies? This lens of analysis is critical because a growing amount of data
show how some types of enterprises, in particular those owned by entrepreneurs
identified as Black, Indigenous, and other People of Color (BIPOC), have experienced
disproportionately severe economic damage throughout the pandemic (R. Fairlie &
Fossen, 2022b; Wallace et al., 2020).

The report proceeds as follows. In the literature review, we contextualize the role of CDFIs
within the existing policy framework for small business support and assess existing modes of
assistance. We then provide an overview of the survey process, the representativeness of the
sample, and summarize the limitations of our methodology. The findings are divided into two
sections. First, we highlight notable variations in firm and owner-level characteristics across
entrepreneurs receiving loans, grants, or both. Second, we examine whether any significant
differences are observable across short-term outputs and outcomes by intervention type.
We conclude with four recommendations to ensure assistance programs can reach all small
businesses, especially those owned by historically underserved and/or under-resourced
populations.

1
Across the non-profit sector, output metrics are highly incentivized by both regulators and funders (Bopp et al., 2017;
Privett & Erhun, 2011). Many evaluations of community development organizations focus on outputs because it allows for
easier quantification of activities in a capacity-constrained environment (Immergluck, 2008).
doi: 10.46712/Extraordinary.Times 2
LITERATURE REVIEW

While the pandemic cast a spotlight on the
important role of small firms in community
placemaking, entrepreneurs have always been
vital parts of regional economies, as small- and
medium-sized firm creation is a foundational
strategy for community development (Acs,
1999a; Aquilina et al., 2006; Neumark et
al., 2006). Small businesses contribute to
local economies by promoting innovation
(Kirchhoff et al., 2013; Schumpeter, 2008),
hiring local residents (N. Miller et al., 2007),
providing desirable non- pecuniary benefits
(Lans et al., 2015; Pugsley & Hurst, 2011;
Storey et al., 2010), and giving local spaces a
unique identity (Agnitsch et al., 2006). For all
these reasons, communities with high levels
of firm size diversity are more likely to enjoy
broad-based economic growth (S. Shaffer,
2006).

CURRENT POLICY FRAMEWORK
FOR SMALL BUSINESS SUPPORT

Regardless of their socioeconomic value Even in the most optimistic of scenarios,
and critical role in shaping a community’s accessing capital is difficult for current and
identity, small businesses rarely thrive aspiring small business owners. Unfortunately,
without assistance. In part, this is because the barriers are even higher for BIPOC
a small firm’s survival is strongly correlated entrepreneurs (Bates & Robb, 2016;
with the ability to access capital. However, Blanchflower et al., 2003a), veterans (Boldon
banking institutions are hesitant to lend in et al., 2016), and women (Bird & Sapp, 2004;
this area because it is challenging to assess Strickland & Burr, 1995). Beyond demographic
the prospects for success in a way that characteristics, there is also substantial
is scalable and conforms with traditional evidence that both rural firms and businesses
underwriting processes (Duarte et al., 2018).2 affected by natural disasters face numerous
Because failure is a natural part of being an challenges around loan access (Duarte et
entrepreneur, traditional financial entities al., 2018; R. Fairlie, 2020; Portuguez Castro
have little incentive to offer capital to smaller & Gómez Zermeño, 2020; Ring et al., 2010;
businesses—and when they do, it is rarely on Runyan, 2006a). Entrepreneurs with these
reasonable terms (Jenkins et al., 2014; Plehn- characteristics are declined for small business
Dujowich, 2010). financing at much higher rates than those

2
Widespread perceptions of outsized “risk” for community-oriented lending are, importantly, not unique to the small
business market. Community development programs designed to bolster capital access in the consumer mortgage market
have faced similar issues (Park & Quercia, 2020; Quercia & Riley, 2017).
CSBDF & ResilNC | ExtraordinaryTimesReport.com 3
from less marginalized populations. own operating funds to issue almost $1M in
Multiple policy frameworks have attempted emergency aid to its own borrowers via grants
to redress these issues, and one of the during the pandemic.5
most successful is the Riegle Community
Development and Regulatory Improvement Providing grant aid is just one example of how
Act of 1994.3 The Act created the Community CDFIs and other community institutions can
Development Financial Institutions (CDFI) act as stabilizing forces. The strong bonds
Fund, an agency of the US Department of they form with those they help can also
the Treasury. Community organizations be invaluable during times of uncertainty.
can apply to the Fund to become certified On a relative basis, entrepreneurs who
as a Community Development Financial have received loans from CDFIs and other
Institution. Certification signifies the entity community financing entities are more likely
has a primary mission of providing financial to proactively ask for help if they are having
services to disenfranchised people and places problems. Reasons for this are complex,
(Patraporn, 2015; G. Smith et al., 2009).4 but some are related to how much these
There are 1,373 certified CDFIs in the borrowers feel “invested in” via the social ties
United States as of June 2022 (Community they form with the lending organization’s staff
Development Financial Institutions Fund, (Appleyard, 2011; McCall, 2020). Compare
2022). In addition to Carolina Small Business this to the typical relationship between a
Development Fund (CSBDF), North Carolina traditional financial institution and a small
is home to 23 other CDFIs including 13 other business borrower. With a normal financing
revolving loan funds, 9 credit unions, and 1 entity, a borrower facing difficulties is unlikely
bank. to reach out for help due to fear of adverse
action. That could take the form of their
USE OF GRANTS AND LOANS financial institution calling a loan, reducing
TO HELP SMALL FIRM OWNERS lines of credit, or other punitive measures
designed to protect the interest of the lending
CDFIs and similar entities can act as entity (DeYoung et al., 2008).
stabilizing forces in the small business lending
marketplace by offering flexible and adaptive
financing. The community development
goals of CDFIs mean they are less likely to
extend credit on unsustainable terms and
more likely to work with borrowers who
face financial trouble. The pandemic added a
new dimension to this stabilizing role via the
provision of emergency cash grants. For the
first time, CDFIs and other entrepreneurial
support organizations offered small business
owners direct cash aid with no expectation of
repayment. For example, CSBDF drew on its

3
Riegle Community Development and Regulatory Improvement Act, 12 U.S.C. 47 § 4701 (1994).
4
CDFIs must show at least 60% of their financial services are provided to approved target markets. Target markets are
defined by federal regulations as either (1) investment area(s) or (2) targeted population(s). (1) Investment areas are
economically distressed geographic units under 12 CFR § 1805.201(b)(3)(ii). (2) Targeted populations per 13 CFR §
1805.201(b)(3) are individuals and/or groups that are low income or otherwise lack access to financial products/services.
5
Pandemic grant assistance from CDFIs (including CSBDF) was primarily via administering grant programs on behalf of
individuals, corporate donors, or public entities. But to our knowledge CSBDF was the only CDFI in the nation to engage a
high level of direct grantmaking using its own operating funds (and not acting as a passthrough entity).
doi: 10.46712/Extraordinary.Times 4
EXISTING MECHANISMS FOR FINANCIAL SUPPORT FOR ENTREPRENEURS

There is a patchwork array of assistance available to small firms across the federal, state, and
local levels. But many state and local programs resemble, sometimes to the point of outright
duplication, initiatives offered by the Small Business Administration (SBA) (Brash, 2008). It’s
important to note, though, that the SBA does not currently engage in any material amount of
direct lending.6 The bulk of its activities revolve around providing guarantees to banks, credit
unions, and community lenders (Craig et al., 2004, 2008). These guarantees incentivize credit
access by making the transaction less risky for the lender – if the borrower defaults, the SBA will
repay some portion of the loan’s proceeds (Salway, 2020; Seidman, 2005). The guarantees are an
implicit acknowledgment that providing financing to entrepreneurs is an inherently risky affair
(B. S. Chen et al., 2017). Among the most popular SBA facilities are 7(a) and, to a lesser extent,
504, named for the sections of the legislation which originated them:7

7(a) Program: Allows for the origination of loans of up to $5M that are backed by guarantees
ranging from 75% to 85%, dependent on loan size. The 7(a) program also houses the Community
Advantage initiative, which likewise offers a 75% to 85% guarantee on loans of up to $350,000.
The lower Community Advantage loan size cap enables greater underwriting flexibility, and
thus non-profit lenders often utilize the facility to finance higher-risk enterprises (Industrial
Economics, 2018).

504 Program: Lenders who are also certified community development corporations (CDCs) can
issue loans with SBA guarantees for up to 40% of a project’s costs with a $5M maximum. Due to
their size, in most cases, 504 loans are funded by multiple lenders as a way to mitigate risk.

From a program evaluation perspective, assessing the community economic development
effects of 7(a) and 504 loan guarantees is challenging. The level of detail available about loan
recipient outcomes is extremely limited. As Brown and Earle (2017, p. 1040) note, “despite the
prominence of SBA programs and the high hopes in their power to stimulate business growth—
there have been few attempts to measure their impacts using appropriate data and econometric
methods.”8

Overall, though, what does exist links both 7(a) and 504 to various positive socioeconomic
impacts (Craig et al., 2007a, 2007b, 2008; Industrial Economics, 2018).
In general, the agency’s lending guarantee facilities appear to boost employment, though
a portion of that effect is attributable to job displacement (D. J. Brown & Earle, 2012).
Concurrently, other studies show SBA guaranteed loans are less likely to reach firms in low/
moderate income BIPOC neighborhoods (Newberger & Toussaint- Comeau, 2014) and may
decrease income growth rates (Higgins et al., 2020).

Compared to the large number of loan products available via SBA guarantees, there was
little grant aid for small firms before COVID-19. Most federal grants for small businesses are
designed to provide incentives for strategic national economic priorities related to research and
development, technology innovation, and trade policy. Key initiatives include the Small Business

6
This could change in the future, as SBA officials have communicated an interest in expanding into more direct lending.
The feasibility of this is unclear due to significant opposition from the financial industry (Reosti, 2022).
7
In addition to 7(a) and 504, lesser-known SBA facilities include microloans geared toward startups and leverage financing
for high growth firms through the Debenture Small Business Investment Company (SBIC) initiative (Brash, 2008).
CSBDF & ResilNC | ExtraordinaryTimesReport.com 5
Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs.
Evaluations of SBIR and STTR generally show grantees have higher growth and firm survival
rates versus similar businesses that do not receive an award (Audretsch, 2003; Lanahan et al.,
2021; Wallsten, 2000). Importantly though, the eligibility requirements are so narrowly tailored
that grant funds are highly inequitable. Awards are overwhelmingly funneled to the technology
sector and to firm owners with a postsecondary degree (Galope, 2014).

8
To be sure, such bleak assessments of evaluation literature are by no means unusual. Measurement difficulties,
endogeneity problems, and the tendency of policymakers to use adverse findings as a political bludgeons has made rigorous
evaluation the exception to the rule (Corduneanu-Huci et al., 2020; Rossi et al., 2019; Weiss, 1997).
doi: 10.46712/Extraordinary.Times 6
HELPING SMALL BUSINESSES area. For example, in the wake of 2008’s
WHEN DISASTER STRIKES Hurricane Ike, survival rates for SBA loan
recipients in Texas were nearly double that of
With no historic precedent to compare the control group (Watson, 2021). Financing
against, there is no way to benchmark the also seems to enable recovery in ways that
effectiveness of pandemic-related small can enhance firm revenues. Analysis of
business aid initiatives. For that reason, it disaster lending programs for Hurricane
is necessary to consider analyses involving Katrina, which made landfall in Louisiana
aid offered in response to hurricanes, in 2005, showed 7% growth in revenue for
earthquakes, floods, and similar natural financing recipients between 2004 and 2011
disasters. Of course, we must caution that (Hiramatsu & Marshall, 2018). This success
such events are fundamentally different seems to hold across most disasters, including
from the pandemic. Though they can create events impacting large areas of geography
widespread destruction, natural disaster for prolonged periods of time (Haynes et al.,
impacts tend to be far more localized 2019).
compared to the pandemic’s global effects.
Additionally, the adverse economic impacts of To be clear, though, the consensus is not
natural disasters tend to be most acutely felt unanimous. Of note, Tierney and Dahlhamer
for days to months after the event, a duration (1997) document an inverse correlation
shorter than the now multi-year pandemic.9 between disaster assistance and small
Finally, disaster relief efforts are designed to business recovery after the 1994 Northridge
mitigate economic damage caused by physical Earthquake in southern California. They
destruction (Dietch & Corey, 2011; Josephson theorize lending programs caused undue
& Marshall, 2016). This is fundamentally financial distress because many borrowers
different than relief designed to buffer against had to take on debt service obligations far
economic damage caused by a public health before the local economic recovery process
emergency. could truly begin.10

With such caveats in mind, the research does Importantly, even when disaster programs
suggest pre-pandemic disaster financing are successful, their positive effects are
programs generally improved the chance of rarely evenly distributed across the small
small firm recovery (McDonald et al., 2014). business ecosystem (Domingue & Emrich,
On the next page, Table 1 highlights some 2019b).11 The data suggest disaster financing
of the most frequently cited research in this is simply less accessible to entrepreneurs

9
For example, the progression of COVID-19’s public health crisis led to extraordinary changes in consumer spending
patterns. While some of these changes were short-term and the most dramatic declines were related to early shutdowns of
firms, they were still remarkable for their depth and cross-industry impacts (Dunn et al., 2020b; Kim et al., 2020). It remains
unclear when or if the shifts in spending patterns caused by the pandemic will return revert to a pre-2020 “normal” (Chang et
al., 2022).
10
A major limitation of this is type of research, however, is selection bias – e.g., businesses that used more financial assistance
for recovery could simply have been harder hit than others.
11
Uneven aid distribution in this sense refers to whether disaster relief delivers an equivalent level of support to
historically marginalized populations. It does not refer to geographic distribution of aid. Existing aid programs do tend to
operate in a geographically equitable manner, meaning places with the highest physical damage tend to receive the most
funding (Domingue & Emrich, 2019a).
CSBDF & ResilNC | ExtraordinaryTimesReport.com 7
who are BIPOC, women, older, and/or from aid reaches high need populations in ways that
lower income households.12 When small have unintended impacts. As an illustrative
business owners with these characteristics example, while financing efforts after Katrina
are approved for aid, the amount of financing were widely heralded as a success, women
is persistently lower compared to other borrowers who received disaster loans were
demographics (Josephson & Marshall, 2014). more likely to subsequently report revenue
There are also circumstances where disaster declines compared to other types of firms.
(Hiramatsu & Marshall, 2018).

12
A complicating factor is that many firms who apply for SBA disaster loans with these characteristics are often relatively
inexperienced borrowers. For example, less sophisticated owners do not always keep electronic copies of key business
documents needed for a financing application. As a result they are often declined when they lose these documents in the
course of the disaster and thus cannot provide them as part of their financing applications (Runyan, 2006b).
doi: 10.46712/Extraordinary.Times 8
TABLE 1. SUMMARY OF EVALUATION RESEARCH ON SBA DISASTER LENDING

Research Question Methodology Data Source(s) Primary Finding(s)
How did SBA disaster loans Logistical regression SBA disaster loan Positive: Businesses who received
impact the survival of small modeling. microdata, Hurricane Ike disaster loans were twice as likely
businesses in Galveston, flood depth and wind speed to survive when compared to the
TX, following Hurricane Ike GIS data, and business control group.
in 2008 (Watson, 2021)? registration records.

How did financial resources Multivariate and probit Small Business Disaster Positive: Receipt of insurance
impact small business regression modeling. Resilience Survey, data from payments and/or SBA disaster
success, resiliency, and a telephone survey of loans increased overall firm
adaptation following businesses operating in ef- survival.
Hurricane Katrina fected areas of Mississippi.
(McDonald et al., 2014)? Positive: Receipt of insurance
payments and/or SBA disaster
loans increased adoption rates
of disaster recovery mitigation
practices.

Positive: Firms who were
approved for an SBA disaster loan
were 7.1% more likely to report a
subsequent increase in revenues.
What is effect of SBA Multivariate and logistic Small Business Survival Positive: Small family-owned
disaster assistance on the regression modeling. and Demise After a Natural businesses who received SBA
survival and success of Disaster Project (SBSD) disaster loans were more likely to
family-owned small Survey, a three-wave panel survive versus other firms.
businesses (Haynes et al., data source.
2019)?

How did receipt of SBA Multivariate regression Small Business Survival Positive: Receiving an SBA
disaster aid influence modeling with and Demise after a Natural disaster loan increased actual
perceived and actual instrumental variables Disaster Project (SBSD) revenues by 7.3% on average
revenue changes before for actual revenue survey, a three-wave panel versus the control group.
and after Hurricane Katrina changes and ordered data source.
(Hiramatsu & Marshall, probit regression Negative: Women owners were
2018)? modeling for perceived more likely to report a revenue
revenue changes. decline after receiving loan, and
being female was one of the larg-
est demographic-related factors
associated with revenue decline.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 9
Economic Injury Disaster Loan: The EIDL
is a recurring SBA loan facility offered for
disaster recovery, and it was one of the
first widely available sources of aid during
the pandemic. Like most COVID-19 aid
programs, the structure and requirements
of the initiative shifted as the pandemic
progressed. The final pandemic version of
the EIDL offered loans of up to $2M for 30
years at a fixed rate of 2.75% to 3.75% for
nonprofits and businesses, respectively.
Payments on EIDL loans were deferred for
the first 2 years after disbursement and in
limited cases up to $15k was considered as
a “loan advance” which need not be repaid.
The EIDL for COVID-19 was closed on
01/01/22 (Small Business Administration,
2022).

Paycheck Protection Program: The PPP
was a first-of-its-kind SBA initiative offered
across 2 rounds (or “draws”) that concluded
on 03/31/21. The program was designed
primarily to help employers retain jobs
during the worst of the pandemic, and as
such awards were available for up to 2.5x
an employer’s average payroll cost. PPP
aid was structured to be a forgivable loan
and widely eligible to private and nonprofit
entities with less than 500 employees. In
cases where an organization that received
a PPP award was declared ineligible for
forgiveness, it converted to a term loan at a
1.00% fixed rate with a repayment length of
2 to 5 years (Small Business Administration,
2021).
CHANGES TO SMALL BUSINESS
AID DURING THE PANDEMIC It’s also important to keep in mind that
both the EIDL and PPP were launched
Compared to the body of literature around quickly and made SBA aid available at an
natural disaster small business aid, there unprecedented scale (Autor et al., 2022).
is still relatively little research on the Despite those challenges approval rates
effectiveness of state and local assistance were high from the start – which was
programs during the pandemic. Due to both laudable, given the level of need. But this
their popularity and data availability, our effectively masked disproportionately high
review will focus on the SBA’s Economic Injury decline rates in marginalized communities.
Disaster Loan (EIDL) and Paycheck Protection
Program (PPP).13

13
Our survey asks about participation in PPP, EIDL, as well as other state and local programs offered during
the analysis period.
doi: 10.46712/Extraordinary.Times 10
As outlined by Table 2 on the following existing business banking relationship.15
page, it took significantly longer for aid This may seem reasonable on its face, but
from these programs to be to be disbursed BIPOC-owned firms are less likely to use
across communities of color as well as dedicated business banking products (Howell
neighborhoods with lower incomes (R. Fairlie et al., 2021). Compounding the issue, PPP
& Fossen, 2022b).14 Even when marginalized application requirements around being
business owners were approved, they rarely in good standing with taxes often raised
received the full amount they were entitled additional access challenges (Sabasteanski et
to. Consider, for example, PPP awards to al., 2021).
Black-owned businesses were about half
the amount received by White-owned Research on the aggregate economic impacts
businesses with similar characteristics (Atkins of EIDL and PPP tends to show contradictory
et al., 2022). Later funding rounds made results. For example, according to survey
notable improvements in these areas, in part data small business owners receiving EIDL
through the strategic use of CDFIs as PPP aid and PPP aid were less likely to experience
providers (R. Fairlie & Fossen, 2022a). revenue declines and more likely to maintain
payroll hours (Li, 2021). This is bolstered by
The reasons for these inequities are complex. data from payroll processors like ADP, which
Many high-need entrepreneurs were simply show notable increases in employment after
unaware of assistance options, meaning that initial PPP disbursements started (Autor
they often did not find out about funding et al., 2022).16 Yet other research using a
until it was exhausted (Li, 2021). For those combination of financial and administrative
that knew about these initiatives, a notable data sources suggests aid recipients saw
number from historically disenfranchised revenue declines of 7% on average. It may
places did not apply due to cultural concerns seem strange that disaster aid with this level
over getting a loan and/or skepticism over of flexibility could reduce revenues, but it
whether the financing would eventually be could be the assistance enabled firms to stay
forgiven (Nurse, 2022). In other cases, there closed longer (Kapinos, 2021).
was awareness and a desire to apply, but small
businesses did not have the knowledge or
resources to navigate the application system
(Granja et al., 2020). And ultimately, even
if an underserved entrepreneur did apply,
the process to approval had many barriers.
For instance, many traditional banking PPP
lenders required applicants to have a pre-

14
Research around PPP and racial disparities can also show confounding results – although this is often due to nuances
around how inequities are measured. Notably, some data suggests firms owned by racial minorities received higher award
amounts when located in communities with a high proportion of BIPOC residents (Calem & Freedman, 2020). But other data
show on a relative basis funds covered a much lower percentage of pre-pandemic payroll employee costs in Asian (26%),
Black (37%), and Latinx (43%) neighborhoods versus White (49%) communities (Pech et al., 2020).
15
Areas with lower incomes, smaller bank footprints, and larger BIPOC populations were thus more likely to seek and be
approved for PPP loans from fintech firms (Chernenko & Scharfstein, 2022; Erel & Liebersohn, 2020). However, caution is
needed in this area because much data show this sector is more likely to engage in predatory lending practices (Maggio et al.,
2022; Palladino, 2020; Ueda et al., 2022).
16
Although the positive employment effect quickly seemed to wane, it remains notable because PPP aid was structured
around employment retention, not job creation.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 11
TABLE 2. SUMMARY OF EVALUATION RESEARCH ON PPP AND EIDL

Research Question Methodology Data Source(s) Primary Finding(s)
How did PPP affect small Difference-in- Anonymized ADP Positive: PPP increased employment for eligible
business employment at differences payroll data. firms by 2-5% at its peak effect in May 2020,
PPP eligible firms relative approach to before shrinking to 0-3% by December 2020.
to PPP ineligible firms compare
(Autor et al., 2022)? outcomes.

Did federal aid improve Descriptive data Census Bureau Small Positive: Recipients of federal aid were less like-
the employment resiliency analysis and mul- Business Pulse Survey ly to report a decrease in either employee hours
and operations of recipi- tivariate regres- (SBPS) response data. or gross revenues.
ent firms (Li, 2021)? sion modeling.
Negative: There is no evidence that firms hit
harder by pandemic were more likely to apply
for federal aid.

How did receiving a Time series Opportunity Insights Negative: Exposure to PPP loans decreased
PPP award impact small modeling Economic Tracker small business revenues by 7% and reduced the
business operations and using regression data, Federal Deposit number of firms that would otherwise have been
revenue (Kapinos, 2021)? impulse response Insurance Corpo- open by 4% between January 2020 and June
functions (IRF). ration’s (FDIC) call 2020.
reports, and FDIC
survey of deposits
information.

Did financial institutions Original SBA PPP microdata Negative: Traditional lenders did not provide
target PPP aid to areas measures of and FDIC call reports PPP loans to areas with higher COVID-19 case
experiencing the highest relative bank information. rates or greater unemployment.
levels of economic distress performance
(Granja et al., 2020)? created by the
authors.

Did FinTechs provide more Multivariate SBA PPP microdata Positive: FinTech lenders appeared to provide
access to PPP loans in regression and FDIC call reports PPP loans to areas with more severe economic
areas experiencing the modeling. information. “shocks.”
highest levels of economic
distress during the 1st Neutral: Borrowers were more likely to apply to
draw of PPP FinTechs in areas with relatively lower incomes,
(Erel & Liebersohn, 2020)? fewer bank branches, and/or a higher proportion
of minority residents.

doi: 10.46712/Extraordinary.Times 12
TABLE 2. SUMMARY OF EVALUATION RESEARCH ON PPP AND EIDL (CONTINUED)

Research Question Methodology Data Source(s) Primary Finding(s)
Are there differences in Multivariate SBA PPP microdata, Negative: Even after controlling for firm-specific
PPP award amounts based regression FDIC call reports effects and size, PPP loan amounts received by
on the racial demographics modeling. information. Black-owned businesses were 50% lower than
of a firm’s owners (Atkins similar white-owned firms.
et al., 2022)?

Within Florida’s restaurant Multivariate SBA PPP microdata, Negative: Black-owned restaurants were less
industry, are there any regression Florida restaurant likely to receive PPP loans from traditional
differences in PPP modeling. license and voter lenders compared to non-traditional lenders.
application and award registration data,
data based on the racial Yelp! reviews, Neutral: Black-owned restaurants were more
demographics of a and business likely to apply for PPP loans from non-traditional
firm’s owners registration records. lenders compared to traditional lenders.
(Chernenko & Scharfstein,
2022)? Neutral: Non-traditional lenders were more
likely to approve PPP loans for Black-owned
firms when compared to traditional lenders.

Was the distribution of Quadratic SBA PPP and EIDL Positive: There is a positive relationship between
PPP and EIDL aid done regression microdata, Census the number of PPP loans within a locale and the
on an equitable basis to modeling. Bureau County minority population share.
minority communities (R. Business Patterns
Fairlie & Fossen, 2022b)? (CBP) information, Negative: There was a considerable time lag
and Annual Business for PPP aid to reach equitable levels in minority
Survey (ABS) data. communities versus non-minority communities.

Is there a relationship be- Multivariate SBA PPP microdata, Positive: Neighborhoods in OZs which rank in
tween an area’s status as regression US Treasury tract- the top 20% of the nation for the percentage of
an Opportunity Zone (OZ) modeling. level data on residents that are minority received 50% larger
and receipt of PPP aid designated PPP awards versus non-OZ neighborhoods in the
(Calem & Freedman, Opportunity Zones bottom 20% of minority population share.
2020)? (OZ’s), and Zip Code
Business Patterns
(ZBP) information.

How has the pandemic Descriptive data Federal Reserve Negative: Firms owned by people of color report
affected the ability of analysis. System’s Small a much lower approval rate.
minority-owned firms to Business Credit
access credit (Federal Re- Survey data. Negative: Firms owned by people of color were
serve Bank System, 2022)? half as likely as their white-owned counterparts
to receive the needed amount of financing.

Negative: Although there was some variation,
approval rates for minority firms were generally
lower across all types of lenders.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 13
doi: 10.46712/Extraordinary.Times 14
METHODOLOGY & LIMIATIONS

SURVEY DESIGN AND DEPLOYMENT TIMELINE

In the two years between 02/01/20 and 02/01/22, CBSDF awarded 1,410 pandemic-related
loan and grant interventions to 1,304 unique firms. Our period of analysis is two years because
our research attempts to measure the early short-term output and outcome indicators of
COVID-19 assistance programs. In the years to come, additional analysis will be needed to
fully understand their scope of impact over the medium- and long-term (Frechtling, 2007). As
detailed by Table 3 on the following page, aid was offered across a combination of 10 different
initiatives. Each recipient firm from these programs was invited to complete a survey via email
invitation. In 43 cases the initial invitation email was returned as undeliverable, so the total
number of firms surveyed is 1,261.

The survey instrument utilized a tailored design approach (Kaplowitz et al., 2004; Stern et al.,
2014). Initial invitations were sent on 06/03/22 with follow-up reminders to non-respondents
on 06/10/22 and 06/17/22 (Kaplowitz et al., 2004; Stern et al., 2014).17 The survey closed
on 07/01/22, and any incomplete were recorded as partially complete responses. Both the
initial invitation and subsequent reminders offered respondents a $10 gift card incentive to
complete the survey.18 A total of 570 responses were received, inclusive of 487 full and 83
partially complete surveys. The overall response rate was 45%, comparatively high for surveys
of this type (Bartholomew & Smith, 2006; Baruch & Holtom, 2008). Because incomplete
surveys are included in the dataset and not all questions required a response, there is variation
in total responses per question (labeled as n). For detailed information about the survey,
including a list of questions, see Appendix II.

17
Survey methods research has shown that response rates increase when email reminders (Millar & Dillman, 2012) and
participation deadlines (Porter & Whitcomb, 2003) are utilized.
18
Survey incentives were paid for by ResilNC and are a standard technique to improve response rates. There is a strong
consensus in the research methodology literature that use of incentives does not result in lower quality or inaccurate data
(Geer, 1988; A. L. Miller & Lambert, 2014; Su et al., 2008).
CSBDF & ResilNC | ExtraordinaryTimesReport.com 15
TABLE 3: LOAN AND GRANTS PROGRAMS INCLUDED IN SURVEY

Program Name & Major Funders Award Count Aid Deployed Average Award First Award Last Award19

Financing Initiatives

Mecklenburg COVID-19 Fund
223 $5,000,000 $22,421 04/20/20 09/29/21
Mecklenburg County Government

NC Rapid Recovery Program20
55 $2,080,646 $37,830 04/06/20 03/29/21
State Government

Durham Business Recovery Loans21
39 $838,850 $21,509 07/21/20 07/22/21
City of Durham

CSBDF Small Business Loan22
14 $2,130,844 $152,203 02/05/20 12/21/21
CSBDF’s Revolving Loan Fund

MeckLending Loan Program23
7 $458,600 $65,514 08/16/21 01/20/22
Mecklenburg County Government

Grant Aid Initiatives

RetoolNC Program24
571 $10,403,291 $18,219 10/25/20 11/04/21
State Government HUB Office

Raleigh COVID-19 Relief Fund
200 $1,400,291 $7,001 06/02/20 12/02/20
City of Raleigh, Private Donors

Durham Recovery Grants
144 $1,101,184 $7,015 07/21/20 01/22/21
City of Durham, Duke University

CSBDF Borrower Grant
121 $966,819 $7,990 11/20/20 12/21/20
State Government CARES Funds

Northeastern Rural NC Grant
36 $65,930 $1,831 10/05/20 11/15/20
NC IDEA Foundation

19
Last award means the last instance of a loan or grant issued before February 1, 2022. In some cases, the program continued
to remain open for applications after this date.
20
Rapid Recovery was a Golden LEAF program utilizing North Carolina state government funding coordinated by the NC
Rural Center. CSBDF was part of a network of community lenders offering financing through the initiative, which in total
issued 2,266 loans for $139.6M and closed in March 2022 (NC Rapid Recovery, 2022).
21
Between the close of our analysis period and September 2022, the Durham COVID-19 loan program issued an additional 6
loans for $170k. It remains open for qualifying firms.
22
CSBDF made a commitment to continue issuing loans where feasible during the pandemic. Lending is now
resuming normal operations, and 15 additional loans for $1.4M were closed through September 2022.
23
This program is the successor to Mecklenburg County’s COVID-19 loan fund and continues to offer financing.
As of September 2022, an additional 11 loans totaling $600k had been issued.
24
There were three rounds of funding for the ReToolNC grant, which CSBDF administered in partnership with the Institute
for Minority Economic Development on behalf of North Carolina’s Historically Underutilized Business (HUB) Office. The
analysis period includes the first two rounds, the third and final round concluded in July 2022 when CSBDF awarded an
additional 513 grants for $9M.
doi: 10.46712/Extraordinary.Times 16
GENERALIZABILITY Table 4 on the following page shows values for
OF SURVEY RESULTS key individual- and firm-level characteristics
across both respondents and non-
Data on community economic development respondents. In most cases, differences
interventions within a single state are subject between these two groups were significant
to perennial critiques about generalizability. as measured across various statistical tests.26
However, there is compelling evidence that In an ideal case, there would be no difference
single-state studies are indicated when the because the sample would resemble the
design allows for the testing of a hypothesis surveyed population on any dimension that
with data that does not exist across multiple might influence the results. But while our
states (Nicholson-Crotty & Meier, 2002). The sample does not have the ideal level of
survey data offer a rare opportunity to com- generalizability, observed variances are well
pare the short-term outcomes of COVID-19 within generally accepted guidelines for
loan and grant programs because CDFIs to survey-based evaluation research (Sharpe,
offered such a mix of assistance options. 2019). Thus, overall, we believe the data are
The CDFI industry was heavily engaged in generalizable and provide much-needed
Paycheck Protection Program (PPP) loans, insight on the short-term impact of small
especially when changes were made to im- business loan and grant aid.
prove access in later rounds (Eggleston, 2021).
But while PPP aid was a critical tool, to our
knowledge very few CDFIs had a level of grant
activity that would allow for similar research
(R. Fairlie & Fossen, 2022b). 25

25
However, we would be remiss if we did not note the small number of CDFIs who did act to provide a diverse array of small
business aid beyond PPP loans and “traditional” emergency financing. One leader in this area is AltCap, a CDFI
headquartered in Kansas City, Missouri, which provided 601 emergency and PPP loans that injected $12.8M into the metro’s
economy during a period of high economic distress. At the same time, AltCap’s affiliated community foundation also
provided 96 cash grants for $660k to small businesses throughout the Overland Park, Kansas area in partnership with local
municipalities (Community Capital Fund, 2021).

26
Based on the format of the data, various analyses were used to determine if differences between the characteristics of the
respondent and non-respondent group are meaningful (Franke et al., 2012). The analyses included chi-square tests
(intervention characteristics, primary owner race), independent sample t- tests assuming equal (firm age) or unequal
variances (assistance amount), and two proportion z-tests (BIPOC-owned, veteran-owned, low income-owned, Lainx-owned,
and rural location percentages).
CSBDF & ResilNC | ExtraordinaryTimesReport.com 17
TABLE 4: COMPARISON OF SURVEY RESPONDENTS AND NON-RESPONDENTS

Responded (n = 570) No Response (n = 691)
Characteristics
Count Percent Count Percent
Intervention Type***
CSBDF Grantee 467 81.9% 491 71.1%
CSBDF Borrower 84 14.7% 182 26.3%
Received Both 19 3.3% 18 2.6%
Amount of Assistance
Mean Aid Amount $17,673.35 $19,709.24
Firm-Level Demographics
BIPOC-Owned** 382 67.0% 422 61.1%
Women-Owned*** 308 54.0% 293 42.4%
Veteran-Owned 26 4.7% 31 4.5%
Low Income-Owned** 95 16.7% 153 22.1%
Rural Location** 61 10.7% 50 7.2%
Mean Firm Age27 9.10 Years 9.24 Years
Primary Owner Race***
Black or African American 319 56.0% 309 44.7%
White 185 32.5% 271 39.2%
Asian 32 5.6% 39 5.6%
American Indian 7 1.2% 6 0.9%
Other or Multiple Races 14 2.5% 36 5.2%
Decline to State28 13 2.3% 30 4.3%
Primary Owner Ethnicity29
Hispanic or Latinx** 27 4.9% 73 10.6%

Note: Statistically significant at ***p < 0.01, **p < 0.05, or *p < 0.10

27
Number of years between the respondent firm’s start date and the date CSBDF awarded a COVID-19 loan or grant.
If the respondent received multiple awards, the date of first intervention is utilized.
28
There is little research on the topic of why individuals sometimes choose to not self-identify their race or ethnicity. What
does exist suggests this can occur for a wide array of reasons. One on end of the spectrum, some don’t disclose their race
because they already feel extremely marginalized (Cabrera & Holliday, 2017). On the opposite end, others believe disclosure
may result in them being seen as coming from a privileged group and cause an unwanted reaction (Rich, 2009).
29
Reflective of the scholarly consensus, and consistent with the recommendation of the US Census Bureau, CSBDF
separates race and ethnicity when collecting demographic data (L. Davis & Engel, 2011).

doi: 10.46712/Extraordinary.Times 18
RESEARCH LIMITATIONS analysis procedures to evaluate CDFI
AND GENERAL CAVEATS activities (McCall & Hoyman, 2021), our
findings test for statistically significant
Scholars have long noted the flaws and differences at ***p < 0.01, **p < 0.05, and
limitations of null hypothesis testing, *p < 0.10.30 This use of statistics applies the
especially in the context of how statistical standard frequentist lens of analysis to
tests are interpreted by readers (Albers et al., determine the probability of observing the
2018; Ziliak & McCloskey, 2008). Research in results if the null hypothesis was true
public policy specifically, and the social (Hubbard, 2011). In this case, significance
sciences more broadly, has an unfortunate usually indicates the likelihood the data would
history of misusing the results of statistical consistently present in this manner if there
analyses (Gorard, 2014; Hensel, 2021). It is was no difference between small business
critical to note a lack of statistical significance owners who received a loan, grant, or both
does not mean a finding lacks importance types of aid. While the complexity level of a
(McShane & Gal, 2017); and conversely, a statistical test should never be equated with
statistically significant finding should not be thoroughness, our approach is rudimentary
interpreted as proof that the intervention (a and offers only minor improvements over
loan or grant, in this case) had an effect. existing CDFI analyses.31 Nevertheless, we
believe such testing can be used to better
To align with our previous arguments assess the outcomes of community develop-
surrounding the need for more rigorous ment activities.

30
We include findings at p < 0.10 as marginally significant, though we acknowledge that there is much debate over whether
this threshold level is appropriate (V. E. Johnson, 2019; Pritschet et al., 2016).
31
An assessment of our findings through something like a Bayesian approach would likely yield more robust results (Held &
Ott, 2018). Unfortunately, the complexity in both time and cost of such alternative methods means a Bayes factor framework
is outside the scope of this project.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 19
doi: 10.46712/Extraordinary.Times 20
FINDINGS AND ANALYSIS
PART I. CHARACTERISTICS OF RECIPIENT FIRMS

TRENDS IN USE OF LOAN AND GRANT FUND PROCEEDS

Respondents were asked to indicate how the proceeds of their loan or grant award were spent
as of the date of the survey. If a firm owner received more than one loan and/or grant, they were
asked to indicate how funds were allocated for each individual award. Figure 1 below indicates
the percentage of unique firms utilizing award proceeds for the listed expenditure category. 32,33
There were some differences between intervention types for a few categories of expenses. Most
recipients used proceeds for working capital, though the proportion was only slightly higher for
borrowers (71.8%) than it was for grantees (64.7%). More notably, a much larger cohort of loan
recipients spent funds on inventory (49.8%) and equipment (29.4%) compared to those receiving
grants (33.3% and 10.8%, respectively).

FIGURE 1: USE OF AWARD FUNDS BY EXPENSE CATEGORY (N = 597)

32
The count (n = 597) exceeds the number of respondents because the unit of analysis is the number of unique grants and
loans received. This is different than the total number of unique firms that responded, since some firms received multiple
awards.
33
Data for Figure 1 required extensive recoding because of the “other” option. For 142 awards, the respondent selected
other but entered text that reflected a pre-existing category. For example, instead of selecting the cashflow needs category,
one respondent selected other and typed “cashflow expenses” as the explanation. The replication data includes a tab that
indicates how the data were recoded for Figure 1.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 21
APPLICATIONS AND APPROVALS FOR OTHER COVID-19 AID

Small business owners were asked to indicate what types of other assistance they applied for,
excluding any help from CSBDF. At the time of the survey, respondents said they had applied
for 1.58 other COVID-19 aid programs on average. However, Figure 2 shows that CSBDF grant
recipients were less likely to apply for other grants or loans. Interestingly, a notable minority of
CSBDF’s grantees (13.1%) did not apply for any other small business aid. Comparatively, no
borrowers (0.0%) in the survey reported that they did not apply for any other aid program.

34
FIGURE 2. APPLICATIONS FOR OTHER COVID-19 ASSISTANCE PROGRAMS (N = 570)

CSBDF Borrower (n=84) CSBDF Grantee (n=467) Received Both (n=19)

100%
81.0%
80%
73.7% 73.7%
66.4% 66.7%
60%
52.5%

40%

20%
10.5% 13.1% 10.5%
7.1% 6.2% 0%
0%
Grants & Forgivable Non-Forgivable Other Direct Didn’t Apply
Loans Loans Aid For Aid

In many cases not applying for aid was simply a matter of place luck or serendipity (Reese &
Ye, 2011). For example, a business owner who was located just outside of a downtown district
would not qualify for grants and loans offered by a downtown development organization. In
other instances, applying for aid reflects a small business owner’s ability to access information.
After all, it is not possible to apply for a pandemic relief program if you don’t know about
its existence.

34
Grants and Forgivable Loans are categorized as 1st and 2nd draws of the federal Paycheck Protection Program, the federal
Restaurant Revitalization Grant, the state Job Retention Grant, the state Business Recovery Grant, and any local
government COVID-19 relief grants. Non-Forgivable Loans means the federal Economic Injury Disaster Loan Program, the
state Rapid Recovery Loan, and any local government COVID- 19 relief loans. Other Direct Aid is all other assistance forms,
including North Carolina’s mortgage and utility rate relief programs, since for many small firm owners their principal place of
business is their home.
doi: 10.46712/Extraordinary.Times 22
Throughout the COVID-19 crisis, historically marginalized entrepreneurs often had the highest
knowledge gap in terms of available assistance options (Klein & Todesco, 2021; Meurer et al.,
2022). In particular, Latinx small business owners were often adversely affected when pandemic
aid initiatives failed to use culturally appropriate marketing, did not offer bilingual application
options, and/or required proof of citizenship (Kolker, 2020).35

Excluding CSBDF’s aid, respondents indicated approval for 1.29 other programs on average. As
noted in Table 5 below, the overall reported approval rates were quite high – over 80%. But as we
noted in the literature review, high approval rates for COVID-19 assistance masked how funds
were failing to flow to people and places with the highest need. One of the most documented
examples involves the early rounds of PPP, where Black-owned firms were much less likely to
apply for and receive funds. Many of these issues were later rectified through administrative
changes in the second draw application process (R. Fairlie & Fossen, 2022b). But in the end, the
aid amount Black businesses were approved for was still consistently lower even when
controlling for revenues and industry type (Atkins et al., 2022).

TABLE 5: APPROVALS FOR OTHER COVID-19 ASSISTANCE PROGRAMS (N = 570)
Applied Approved Approved
Other Financial Assistance Applied For 36
Count Count Percent
Federal COVID-19 Assistance
Paycheck Protection Program 362 331 91.4%
Economic Injury Disaster Loan 310 260 83.9%
Restaurant Revitalization Grant 39 28 71.8%
State COVID-19 Assistance
Rapid Recovery Loan 32 22 68.8%
Mortgage, Utility, and Rate Relief Program 12 6 50.0%
Business Recovery Grant 74 31 41.9%
Job Retention Grant 6 2 33.3%
Local Government COVID-19 Assistance
Local Government COVID-19 Relief Grant 38 28 73.7%
Local Government COVID-19 Relief Loan 8 5 62.5%
Any Other Program Not Listed
All Other COVID-19 Aid Programs 26 20 76.9%
Total Applications and Approvals
All Non-CSBDF COVID-19 Programs 906 733 80.9%

The survey also asked respondents to indicate whether CSBDF’s loan or grant represented the
first instance of COVID-19 aid received by the firm. Presumably the marginal impact of the
intervention could be different for respondents’ whose first experience in receiving a
pandemic loan or grant came from a CSBDF program. We might hypothesize a lower relative
impact in cases where CSBDF’s aid was supplementary and in addition to help from other

35
There is little evidence to support the notion that citizenship screening questions are effective in preventing illegal
residents from receiving government aid. Instead, these questions have a chilling effect on Latinx individuals who are
citizens, making them less likely to apply for aid (Gonzalez et al., 2020).
36
A total of 28 respondents indicated they were declined for all COVID-19 aid they applied for.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 23
sources. At the time of receiving a CSBDF grant or loan, 58.0% of firms had applied for assistance
from other COVID-19 relief programs. Of the subset of respondents who had applied for other
aid, Figure 3 shows borrowers (40.0%) reported higher approval rates versus grantees (32.6%).

FIGURE 3: RESULT OF RELIEF APPLICATIONS PRIOR TO CSBDF’S INTERVENTION (N = 333)
Approved Declined

CSBDF Borrower
(n=45) 40.0% 60.0%

CSBDF Grantee
(n=276) 32.6% 67.4%

Received Both
50.0% 50.0%
(n=12)

Total 65.8%
(n=333) 34.2%

0% 100%

FINANCING APPLICATIONS & APPROVALS BEFORE THE PANDEMIC

Small business growth is highly correlated with a firm’s ability to access financial capital on
reasonable terms (Wiklund et al., 2009). On the next page, Figure 4 shows there was little differ-
ence in pre-pandemic application activity across intervention types. Overall, 20.8% of loan recip-
ients and 19.6% of grant recipients said they had applied for loan prior to the pandemic. But while
application rates were similar, denial rates were a different story.

Pre-pandemic loan denial rates were notably higher for those awarded CSBDF’s pandemic grants
(6.9%) versus those receiving loans (2.8%).37 While this difference could be explained by firm
size and financial health, our data suggests this is unlikely. The tendency of grant recipients to be
declined for loans before the pandemic remains even when controlling for the respondent firm’s
age, revenues, and current employment levels.38

37
A chi-square test for approval rates across intervention types shows p = 0.107, falling just short of the marginal
significance threshold of p < 0.10.
38
We estimated an ordinary least squares regression model with loan application outcomes as the dependent variable and
(1) firm age, (2) current FTE count, and (3) annual revenue category as the independent variables. The model was statistically
significant (p < 0.05) but the independent variables explained a very small portion of the variation in the dependent variable
(adjusted R2= 0.127).
doi: 10.46712/Extraordinary.Times 24
FIGURE 4: PRE-PANDEMIC FINANCING APPLICATIONS AND APPROVALS (N=497)

Applied & Approved Applied & Denied Never Applied

CSBDF Borrower
18.0% 79.2%
(n = 72)
2.8%
CSBDF Grantee
(n = 408) 14.7% 6.3% 79.1%

Received Both
(n = 17) 47.1% 5.9% 47.0%

Total
14.7% 6.3% 79.1%
(n = 497)

0% 100%

There is a strong negative correlation between having been declined prior to the pandemic and
39
the firm owner’s race. This is consistent with the body of scholarship that shows Black-owned
firms are more likely to be denied access to small business credit (Blanchflower et al., 2003a;
Meyer & Schweitzer, 2022; Weller, 2009). This is true even if firms owned by Black individuals
are financially similar in every other respect to firms owned by White individuals (Mijid &
Bernasek, 2013). The consequences of such ongoing disparities are well documented. Not only
does a lack of credit inhibit business growth, but it can also contribute to firm failure. Credit de-
nials can often hasten firm destruction when disenfranchised owners turn to predatory financial
products to meet their capital needs (Charron-Chénier, 2020; Henderson et al., 2015).

RESPONDENT GROSS ANNUAL REVENUES

CSBDF grant aid recipients were disproportionately more likely to report lower revenues in
their most recently completed tax year. On the next page, Figure 5 shows the plurality of grant-
ees (32.6%) reported annual revenues of less than $50k compared to borrowers (12.9%). This
pattern is not due to program design, as CBSDF’s COVID-19 aid programs were generally avail-
able to all firms with $1M or less in annual revenues. However, this may be a self-selection effect
wherein more sophisticated and/or larger firms were more likely to apply for loan aid. It may
seem unusual to characterize applying for funds that do not need to be repaid as less
sophisticated. But because grant programs had much lower caps ($35,000) versus loan initiatives
($250,000), they rarely provided sufficient funds to make major purchases.

The data again demonstrate a strong correlation between a firm owner’s primary race and their
level of gross revenues. On the next page, Figure 6 shows Black respondents indicated gross
revenues of less than $50,000 at a far higher rate (40.9%) compared to White respondents
(13.8%). This effect holds even when controlling for the respondent firm’s age. Admittedly this
39
There was primary owner race data for 97 respondents who indicated applying for a loan before January 2020. Race data
was recoded (BIPOC = 1, all others = 0). The results are significant at p < 0.01 with a Pearson’s correlation of -0.375.
Importantly though, differences by race are statistically significant only across Black and White respondents. For additional
details, see Table A1 in Appendix I.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 25
may also reflect the industry mix of the sample, which we cannot control for due to incomplete
data. Nevertheless, the trend is consistent with research showing Black-owned firms have lower
revenues on average, even after controlling for industry mix and time in business (R. W. Fairlie &
Robb, 2008a; Freeland & Keister, 2016).

FIGURE 5: DISTRIBUTION OF RESPONDENT GROSS REVENUES (N = 492)40

FIGURE 6: DISTRIBUTION OF RESPONDENT GROSS REVENUES BY RACE (N = 492)42

40
A Chi-square test comparison of values across the category of intervention (loans, grants, both) and category of reported
revenues suggests differences are statistically significant at p < 0.01 with a Cramer’s v medium to large effect size of 0.197.
41
We estimated an ordinary least squares regression model with firm revenue categories as the dependent variable and the
(1) primary owner’s race, (2) the intervention type (loan, grant, or both) and (3) firm age as independent variables. The overall
model has an adjusted R2 of 0.177 and is statistically significant at p <0.01. All independent variables were statistically
significant, but the owner’s race had a 58% Johnson’s relative weights value, higher than either intervention type (22%) or
firm age (20%).
42
A Chi-square test comparison of values across the primary owner’s racial category and level of reported revenues suggests
differences are statistically significant at p < 0.01 with a Cramer’s v large effect size of 0.415.
doi: 10.46712/Extraordinary.Times 26
FINDINGS AND ANALYSIS
PART II. SHORT-TERM IMPACTS FROM INTERVENTIONS

As outlined in Table 6 below, the remainder of the findings examine variations in the output and
outcome goals for CSBDF’s COVID-19 aid programs. Like the previous section, our lens of
analysis concerns whether there is variation in these metrics by intervention (received a loan,
grant, or both) and if reported impacts are different for firm owners from historically
marginalized constituencies.

TABLE 6. TARGETED OUTPUTS AND OUTCOMES

Category Short-Term Impact Surveyed Metric

Outputs Supports Existing Employment Position(s) Higher levels of current full-time equivalent employees.

Improves Firm’s Financial Stability More cash on hand to pay for business expenses.

Creates Higher Levels of Social Capital Increased bridging, bonding, and linking activities.

Outcomes Cultivates Trust in Organizations & Individuals More likely to trust business support entities.

Improved Business Sentiment Favorable perception of local economic conditions.

Fosters Need for Future Financing Anticipated need for loan in future.

OUTPUT: SUPPORTS EXISTING EMPLOYMENT POSITION(S)
Since job creation and retention is a desirable outcome of small business support, it is a highly
valued output metric by COVID-19 aid funders. Although small businesses make an array of
other contributions to their local communities, job creation and retention remains the primary
way to measure entrepreneurial success (S. Davis et al., 1996; Decker et al., 2014; Gabe, 2017;
McCall & Hoyman, 2021). There were stark differences in the number of full-time equivalent
(FTE43) employees at the time of the survey across firms, ranging from a low of 044 (indicating
firm failure) to a high of 252. As shown in Table 7 on the next page, respondents receiving loans
reported 7.7 FTEs on average, higher than the 5.1 FTEs reported by grantees.45

43
We define a full-time equivalent employee (FTE) as one individual working an average of 35 hours per week throughout
the year (Carolina Small Business Development Fund, 2022). For example, if a small business reports 4 part-time employees
working 17.5 hours each week on average, that is 2 FTEs.
44
CSBDF’s employment definitions were created to aid in the impact measurement process. The framework is different from
traditional economic lens and its distinction between employer and non-employer firms (Corcoran et al., 2021). For example,
firm owners that receive remuneration through non-payroll means are considered as employed for impact measurement
purposes, even if they would otherwise be classified as non-employers.
45
Ranked ANOVA is statistically significant at p < 0.05 with a Cohen’s f medium effect size of 0.204. For ranked pairwise test
results, see Table A2 in Appendix I.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 27
TABLE 7: LEVEL OF FTE EMPLOYMENT AT TIME OF SURVEY (N = 512)

Median Average 95% Confidence Standard
Respondent Category Count
FTEs FTEs Minimum Maximum Deviation
CSBDF Borrower 75 4.6 7.7 5.6 9.9 9.2
CSBDF Grantee 419 2.6 5.1 3.7 6.5 14.5
Received Both 18 2.5 4.7 2.1 7.3 5.2
Total 512 2.9 5.5 4.3 6.7 13.6

We created a simple linear regression model to identify what factors might best explain
observed variances in respondent FTE levels. An overview of the results is shown in Table 8.46
Overall, the model shows about 38% of variation in reported FTE levels across respondent
firms.47 Both firms with higher revenues and those who received a small business loan before
January 2020 were associated with higher employment levels at the time of survey. Conversely,
small business owners indicating no plans to seek financing in the next 12 months were
correlated with lower levels of employment. Such results are perhaps intuitive and thus
unsurprising, but they do reiterate the importance of access to capital for small business.

TABLE 8: MAJOR INFLUENCES ON VARIATION IN FTE EMPLOYMENT (N = 487)

Notable Factors Influencing Variation Influence on FTE Results
Variation in Respondent FTE Levels Explained Levels Confidence
Higher Gross Revenues 74.4% Increases  High
Received Both Loan and Grant 5.3% Increases  Medium
Previously Received CSBDF Loan 4.3% Increases  High
No Future Financing Plans 1.6% Decreases  Medium
Explained by Other Variables 14.1% Low

OUTCOME: IMPROVES FIRM’S FINANCIAL RESILIENCY

As a measure of resilience and the potential effectiveness of relief funds, we asked respondents
to estimate how long they could pay for expenses with cash on hand. Smaller businesses rarely
have sufficient cashflow to cover expenses for any length of time. In a disaster, this can
accelerate the path to permanent closure (Schrank et al., 2013). Even in normal operating
conditions, few small businesses can cashflow their expenses for any length of time before
having to lay off staff or reduce costs (Farrell & Wheat, 2016). Table 9 on the next page shows
firms receiving grants (32.9%) were more likely than those receiving loans (22.9%) to report less
than 30 days of cash on hand to pay for business expenses.48 This difference is notable and a posi-
tive indicator of the effectiveness of the surveyed interventions. Those firms with the highest
objective need for urgent assistance, as measured by having very low levels of cash on hand,
were more likely to receive a grant.
46
See Table A3 in Appendix I for the full model as well as additional information about the model’s assumptions and
imputations. In the simplified table presented above, variation explained is Johnson’s relative weights (Tonidandel &
LeBreton, 2011), influence on FTEs indicates whether the coefficient’s value was positive or negative, and results confidence
is the variable’s level of significance at p < 0.01 (high), p < 0.05 (medium), p< 0.10 (medium), or not significant (low).
47
R2 is 0.399 and Adjusted R2 is 0.380, the overall model is statistically significant at p < 0.01.
doi: 10.46712/Extraordinary.Times 28
TABLE 9: CASH ON HAND TO COVER EXPENSES (N = 484)

Category < 30 Days 30-60 Days 60-90 Days > 90 Days
CSBDF Borrower (n = 70) 22.9% 28.6% 31.4% 17.1%
CSBDF Grantee (n =398) 32.3% 34.1% 21.1% 12.5%
Received Both (n =16) 37.5% 50.0% 6.3% 6.3%
Total (n = 484) 31.1% 33.8% 22.1% 13.0%

In an emergency, be it natural or manmade, the literature suggests stabilizing smaller firms is
critical for the nation’s economy, as smaller firms are essential for sustaining a functioning
economy and assuring the delivery of goods (Burton et al., 2011) . Yet because many small- and
medium-sized firms are concentrated in the service sector, they are the most likely to suspend
operations or even permanently shut down during a crisis (Rebmann et al., 2013). These effects
were acutely observed during the early period of the pandemic, when catastrophic financial
losses occurred after many smaller businesses were shuttered.

Notably, the impact of these closures was again most frequently observed in BIPOC-owned
enterprises, with 41% of Black-owned and 32% of Latinx-owned firms shuttering nationwide
(R. Fairlie, 2020). Our data provide additional context for why this is an issue by showing a
correlation between the respondent firm’s level of cash on hand and the primary owner’s race.
As an illustrative example, Table 10 shows that Black- owned firms (35.9%) were much more
likely to report having less than 30 days cash on hand compared to enterprises owned by Whites
(25.2%) and Asians (23.8%).

TABLE 10: CASH ON HAND TO COVER EXPENSES BY PRIMARY OWNER RACE (N = 484) 49

Primary Owner Race Count < 30 Days 30-60 Days 60-90 Days > 90 Days
American Indian 7 0.0% 42.9% 57.1% 0.0%
Asian 21 23.8% 38.1% 9.5% 28.6%
Black 274 35.9% 34.1% 19.4% 10.6%
Other 11 33.3% 33.3% 11.1% 22.2%
White 159 25.2% 33.3% 26.4% 15.1%
Decline to State 12 16.7% 25.0% 33.3% 16.7%
Total 484 31.0% 33.9% 22.0% 13.1%

48
Caution is advised in generalizing these results because a chi-square comparison of values across the category of
intervention and level of reported cash on hand is not statistically significant.
49
A Chi-square test comparison of values across the primary owner’s racial category and level of reported cash on hand is
marginally significant at p < 0.10 with a Cramer’s v small to medium effect size of 0.142.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 29
OUTCOME: CREATES HIGHER LEVELS OF SOCIAL CAPITAL

The pandemic has magnified the already 1 Bridging Social Capital
strong nexus between economic distress When small businesses engage in bridging
and weak social capital networks (McCall & activities (see Figure 7, Quadrant I), they
Williams, 2020). Social capital refers to the interact with individual(s) and organization(s)
networks embedded within organizations that are fundamentally different from them in
that facilitate trust and norms to improve the some way (Knudsen et al., 2000). This forms
efficiency of society via coordinated action strong ties that endure over time which have
(Putnam et al., 1994). Research suggests the some level of personal or professional depth
concept has a three-pronged mechanism of (Granovetter, 1973). This might include, for
action via (1) increasing trust levels, (2) example, a small business owner who
lowering transaction costs, and (3) enabling sponsors a local recreational sports league.50
collective action (Callois & Aubert, 2007).
There is a strong correlation between 2 Bonding Social Capital
sustainable development and the density In contrast bonding activities (See Figure 7,
of a community’s social capital networks Quadrants III and IV) strengthen relationships
(Bjørnskov, 2012a; Casey & Christ, 2005a; between an entrepreneur and individual(s)
Eagle et al., 2010a; Guiso et al., 2004; Putnam, and/or organization(s) with similar
2001; Westlund & Bolton, 2003). socioeconomic characteristics. This might
include business owners who market their ser-
Network interactions between small firms and vices to fellow parishioners at church (Putnam
those who patronize them helps build trust, & Campbell, 2012).
which leads to reciprocal positive
economic outcomes (Hoyman et al., 2016; 3 Linking Social Capital
Leigh & Blakely, 2016; Malizia & Feser, 1999). Finally, linking capital (See Figure 7, Quadrant
For small businesses, engaging in social capital II) represents associations between organiza-
generating activities is correlated with being tions or individuals that have disparate levels
more innovative, increasing revenues, and firm of influence or power (Macke & Dilly, 2010)
survival (Kilkenny et al., 1999; Molina-Morales Linking transactions are an acknowledgment
& Martínez-Fernández, 2010). Survey that networks can grant access to people and
questions asked respondents to measure institutions that operate at a different level of
social capital across three categories: social or economic status. In this context, an
(1) bridging, (2) bonding, and (3) linking (Hoyman example might be a small business owner who
et al., 2016; Williams, McCall, et al., 2021). gets preferable terms with a supplier due to a
Figure 7 on the following page demonstrates referral from their banker.
the theoretical framework behind these
categories.

50
To be a bridging social capital interaction, the small business owner’s industry would need to be unrelated to the sponsor-
ship. For example, a restaurant owner sponsoring a local volleyball team.
doi: 10.46712/Extraordinary.Times 30
FIGURE 7. SOCIAL CAPITAL TYPES IN COMMUNITY ECONOMIC DEVELOPMENT51

Heterogenous Networks

Quadrant I Quadrant II
Linking Social Capital Bridging Social Capital

Transactions between Transactions between
entities with dissimilar entities with dissimilar
levels of resources which social characteristics which
promotes power/status create durable social ties.
equilibrium.
Weak Strong
Ties Ties
Quadrant III Quadrant IV
Bonding Social Capital Bonding Social Capital

Transactions between Transactions between
entities with similar entities with similar
socioeconomic characteristics socioeconomic characteristics
which create permeable social which create durable social
ties. ties.

Homogenous Networks
X-Axis: Depth and durability of social ties from low (left) to high (right).

We asked the recipients of CSBDF’s pandemic aid to indicate agreement with a series of state-
ments that represent bridging, bonding, and linking capital (Berner et al., 2019). As shown in
Table 11 on the next page, there were differences in levels of agreement between loan
recipients (54.9%) and grant recipients (46.7%) on issues like knowing where to go for help if
needed. Additionally, fewer borrowers (5.7%) disagreed with the idea that most people could be
trusted versus grantees (14.7%). If we sum the total level of social capital sentiment reflected in
all five statements, loan recipients have a 5.5% higher score than those who received grants.52
But while this difference is meaningful in a vacuum, it is no longer statistically significant after
controlling for the primary owner’s racial minority status.53 In other words, differences are
because minority respondents have lower aggregate social capital scores and were more likely to
receive grants.

51
Bridging, bonding, and linking capital are all vital because they shape community economic development outcomes in
different ways (Hoyman et al., 2016; Williams, McCall, et al., 2021).
52
Level of agreement was recoded to numerical values (strongly disagree = 1, disagree = 2, undecided = 3, agree = 4, strongly
agree = 5) and resulted in mean sentiment scores of 3.54 for loans, 3.35 for grants, and
3.50 for both. ANOVA differences between mean recoded scores and intervention type is marginally significant at p < 0.10
with a Cohen’s f small effect size of 0.100.
53
The mean aggregate social capital score variable was regressed against the intervention type and a dichotomous variable
for whether the firm’s primary owner was a racial minority. The overall model was statistically significant at p < 0.01. But the
independent variables explained a very small portion of the variation in the dependent variable (adjusted R2= 0.062) and
intervention type was not significant.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 31
TABLE 11: PERCEPTIONS OF SOCIAL CAPITAL & COMMUNITY54 SUPPORT NETWORKS

Respondent Category Agree Disagree Undecided
If my business runs into trouble, I know where to go for help.*
CSBDF Borrower (n = 71) 54.9% 21.1% 23.9%
CSBDF Grantee (n = 394) 46.7% 24.1% 29.2%
Received Both (n = 18) 72.2% 5.6% 22.2%
Most people in my community can be trusted.**
CSBDF Borrower (n = 70) 65.7% 5.7% 28.6%
CSBDF Grantee (n = 385) 53.0% 14.5% 32.5%
Received Both (n = 17) 47.1% 11.8% 41.1%
If my community has a problem, we work together to solve it.
CSBDF Borrower (n = 68) 52.9% 17.6% 29.4%
CSBDF Grantee (n = 385) 45.5% 21.0% 33.5%
Received Both (n = 18) 50.0% 5.6% 44.4%
My community supports entrepreneurs like me.
CSBDF Borrower (n = 71) 63.4% 11.3% 25.4%
CSBDF Grantee (n = 392) 55.9% 15.8% 28.3%
Received Both (n = 17) 64.7% 5.9% 29.4%
My neighborhood’s small business owners help each other.
CSBDF Borrower (n = 69) 58.8% 18.8% 23.2%
CSBDF Grantee (n = 381) 48.0% 20.5% 31.5%
Received Both (n = 17) 52.9% 17.6% 29.4%

Note: Statistically significant at ***p < 0.01, **p < 0.05, or *p < 0.10.55

54
When viewing social capital through an equity lens, it must be acknowledged that terms like “community” can vary by race,
ethnicity, and class (S. S. Smith, 2000). While our survey controls for this in that we utilize statements reflecting both
bridging and bonding capital constructs, our operationalization of these categories is too simplistic to capture the full
nuance of this issue.
55
Based on ANOVA analysis derived from recoding level of agreement (strongly disagree = 1, disagree = 2, undecided = 3,
agree = 4, strongly agree = 5) and comparing mean score differences across intervention types.
doi: 10.46712/Extraordinary.Times 32
OUTCOME: CULTIVATES TRUST IN ORGANIZATIONS & INDIVIDUALS

Research has long established that trust plays a critical role in lowering the types of transaction
costs which often impede economic growth. During the pandemic, this was reflected in how
small business businesses were better able to access aid when embedded in communities with
higher levels of institutional trust (Maksimovic et al., 2022). Figure 8 shows the percentage of
respondents indicating they would trust the listed organization, individual, or group to provide
them with correct information about small business matters. While there are differences here
across intervention type, they are relatively small compared to the social capital sentiment
scores discussed above.

FIGURE 8: PERCENT RESPONDENTS WHO WOULD TRUST
THE LISTED ENTITY/INDIVIDUAL ON BUSINESS MATTERS

CSBDF & ResilNC | ExtraordinaryTimesReport.com 33
OUTCOME: IMPROVED BUSINESS SENTIMENT

Respondents were asked questions to measure their business sentiment. Firm sentiment is often
used as a subjective thermometer to determine on-the-ground economic conditions. Table 12
shows borrowers were more likely to have a positive overall business sentiment outlook than
those who received grants.56 As we might expect, those who received loans (55.1%) were more
likely to report an ability to get financing when needed compared to those who received grants
(32.6%). Conversely, grant recipients (24.3%) were more likely to report concerns about future
COVID-19 surges compared to loan recipients (15.0%). Interestingly, despite the tight labor
market about half of grantees (50.4%) and borrowers (51.5%) said they could find qualified
employees for open job positions.

TABLE 12: OPERATING BUSINESS CONDITIONS SENTIMENT

Respondent Category Agree Disagree Undecided
We can get business financing when needed.***
CSBDF Borrower (n =69) 55.1% 23.2% 21.7%
CSBDF Grantee (n = 389) 32.6% 37.9% 29.5%
Received Both (n = 16) 50.0% 25.0% 25.0%
We have no concerns about another COVID-19 surge.**
CSBDF Borrower (n = 70) 24.3% 51.4% 24.3%
CSBDF Grantee (n = 398) 15.0% 71.2% 13.8%
Received Both (n = 15) 26.7% 60.0% 13.3%
We are able to recruit and retain qualified employees.
CSBDF Borrower (n = 68) 51.5% 26.5% 22.1%
CSBDF Grantee (n = 370) 50.4% 33.2% 16.4%
Received Both (n = 16) 68.8% 25.0% 6.3%
We anticipate increasing demand for our services.
CSBDF Borrower (n = 70) 62.9% 5.7% 31.4%
CSBDF Grantee (n = 397) 67.1% 7.0% 25.9%
Received Both (n = 14) 71.4% 0.0% 28.6%
We have no issues finding or sourcing business supplies.
CSBDF Borrower (n = 68) 44.1% 36.8% 19.1%
CSBDF Grantee (n = 390) 46.0% 39.4% 14.6%
Received Both (n = 15) 40.0% 46.7% 13.3%

57
Based on ANOVA analysis derived from recoding level of agreement (strongly disagree = 1, disagree = 2, undecided = 3,
agree = 4, strongly agree = 5) and comparing mean score differences across intervention types.

doi: 10.46712/Extraordinary.Times 34
OUTCOME: FOSTERS NEED FOR FUTURE FINANCING

To capture the firm’s forward-looking business outlook, respondents were asked about their
capital needs over the next 12 months. Entrepreneurs seeking to grow usually require capital
infusions, and they are unlikely to seek debt financing if they have a negative outlook about their
own business or the economy more broadly (Lechner & Pervaiz, 2018)(Lechner & Pervaiz, 2018).
Table 13 demonstrates those who received grant aid (77.2%) were more likely to say they would
need a loan in the next 12 months than those who received a loan (65.3%). One of the largest
factors for a response indicating a need for financing is the primary owner’s race. For example, as
shown by Table 14, Black-owned firms indicated a higher anticipated need for financing (87.8%)
versus White-owned firms (51.5%).

TABLE 13: ANTICIPATED NEED FOR CAPITAL IN NEXT 12 MONTHS (N = 359)58

Respondent Category Count Will Need Financing No Anticipated Needs
CSBDF Borrower 49 65.3% 34.7%
CSBDF Grantee 298 77.2% 22.8%
Received Both 12 75.0% 25.0%
Total 359 75.5% 24.5%

TABLE 14: ANTICIPATED NEED FOR CAPITAL BY RACE OF OWNER (N = 358)
Primary Owner Race Count Will Need Financing No Anticipated Needs
American Indian 3 33.3% 66.7%
Asian 12 66.7% 33.3%
Black 229 87.8% 12.2%
Other 7 100.0% 0.0%
White 99 51.5% 48.5%
Decline to State 8 37.5% 62.5%
Total 358 75.7% 24.3%

58
This question was only displayed to respondents who indicated their business was open and operating at the time of
survey.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 35
Importantly, a limitation of our research is that we have insufficient data to know why certain
firm owners have no interest in credit. During the pandemic, levels of debt aversion increased
across many types of entrepreneurs, a pattern that frequently emerges during periods of
economic uncertainty (Paaso et al., 2021). Even outside of the context of a disaster, some
business owners prefer to avoid loan repayment obligations due to low levels of trust in
financial institutions (Nguyen et al., 2021). In other cases, an entrepreneur simply does not wish
to expand for lifestyle and/or family reasons (Walker & Brown, 2004; Wu et al., 2007). Finally,
sometimes an owner may seek business capital to temporarily relieve financial distress through
short-term cash infusions. This later type of motivation may result in a positive (firm stability) or
negative (firm failure) outcome, depending on the business management knowledge of the
owner(s) and financing terms (Charron-Chénier & Seamster, 2021).59

We also asked respondents how they would use future loan proceeds, if approved. Based on
anticipated funds use, the data could indicate many small business owners are still facing
short-term challenges. As shown by Table 15, most respondents would use financing for working
capital (39.1%) or for cashflow needs (20.3%). Both items represent expenses that could be
considered more immediate or pressing in nature. The third most frequently selected use of
funds category was purchasing machinery and equipment (12.9%). This is in theory a medium or
long-term expense, but it was not selected by a large proportion of respondents. Differences
between loan and grant recipients on use of funds from future financing are mostly immaterial,
with one exception. A larger percentage of grant aid recipients (40.0%) would use financing
proceeds for working capital vs those who received loans (31.3%).

TABLE 15: PRIMARY USE OF LOAN PROCEEDS, IF APPROVED60

CSBDF CSBDF Received
Total
Primary Use of Funds Borrower Grantee Both
(n = 271)
(n = 32) (n = 230) (n = 9)

Working Capital 31.3% 40.0% 44.4% 39.1%
Cashflow Needs 25.0% 20.0% 11.1% 20.3%
Machinery & Equipment 9.4% 13.9% 0.0% 12.9%
Inventory & Supplies 9.4% 8.3% 11.1% 8.5%
Other Use of Funds 3.1% 8.3% 0.0% 7.4%
Real Estate Purchases 3.1% 4.3% 11.1% 4.4%
Leasehold Improvements 3.1% 2.6% 11.1% 3.0%
Business Acquisition 6.3% 1.3% 11.1% 2.2%
Refinance Business Debt 9.4% 1.3% 0.0% 2.2%

60
This question was only displayed to respondents (1) with open and operating firms at the time of survey who (2) indicated a
likely need for financing in the next 12 months.
doi: 10.46712/Extraordinary.Times 36
CONCLUSIONS
While the worst parts of the pandemic are subsiding, its adverse impacts continue to
reverberate across North Carolina’s entrepreneurial community. The path to full recovery in the
wake of COVID-19 is long, and we find preliminary support for continued use of both grant and
loan interventions to redress inequities and build resiliency. Our findings offer a counterpoint
to the idea that pandemic policy responses were sufficient, and no additional action is required
(Harasztosi et al., 2022; IMF Fiscal Affairs Department, 2021).

Table 16 below summarizes our findings and suggests which intervention is most correlated with
a greater improvement in the indicated metric.61, 62 Categorizing whether a loan or grant is the
favored intervention type is based on (1) our assessment of descriptive differences between the
two interventions, (2) whether any differences are statistically significant, (3) the extent to which
any significant differences remain after our findings and any existing scholarly literature (Oliver
et al., 2005).

We include a low, medium, or high certainty ratings for each metric, indicating our level of
confidence that repeated studies would favor the indicated intervention. For example, the data
suggest borrowers have higher employment levels than grantees. But since we cannot control
for numerous endogenous variables which might influence employment counts, there is a low
level of certainty in that finding. This assessment process is, almost by necessity, a qualitative
judgement with an inherent level of subjectivity. At present there is simply insufficient data to
conduct any sort of rigorous and systematic grading of intervention types.

TABLE 16: DIFFERENCES IN SHORT-TERM OUTPUTS & OUTCOMES BY INTERVENTION

Favored Intervention Certainty
Outputs and Outcomes
Loan Grant Level
Supports Existing Employment Position(s)  Low
Improves Firm’s Financial Stability  Medium
Creates Higher Levels of Social Capital No Difference Medium
Cultivates Trust in Organizations & Individuals No Difference Low
Improved Business Sentiment  Low
Fosters Need for Future Financing  High

Our findings must be considered in the light that few areas of development policy are supported
by quality evidence and high levels of certainty (Berger et al., 2021; Grayson & Gomersall, 2003).
Loans, for example, are the lifeblood of the community development sector—but as one system-
atic review of small and medium-sized enterprise (SME) financing initiatives noted, “it remains
unclear to what extent SME financing contributes to economic development and poverty
reduction” (Kersten et al., 2017, p.330). While the evidence for small business lending as a
development strategy is limited, what does exist is positive enough to support continued work
in this area (McCall & Hoyman, 2021). In a similar fashion, we argue that there is a continued
need to support grant aid, emergency loans, and combined grant aid/loan interventions.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 37
doi: 10.46712/Extraordinary.Times 38
RECOMMENDATIONS

1. Small business recovery efforts must work to promote equitable
access to aid in a more strategic and intentional manner.

Our data add to existing scholarship highlighting life in Black communities (Asante-Muhammad et
how socioeconomic disparities can accrue at al., 2021). Black-owned firms have always faced
different rates across historically marginalized significant credit access barriers (Chernenko &
communities (Wilson et al., 2020). The findings Scharfstein, 2022; Federal Reserve Bank Sys-
are reflective of a growing body of research tem, 2022) which have persisted for longer and
demonstrating the strongest correlates with are more severe compared to capital access
adverse pandemic impacts are a firm owner’s across other racial minorities (Bates, 1989; R. W.
race, ethnicity, and/or income level (Karpman et Fairlie & Robb, 2008a). As a result, on a propor-
al., 2020). The bulk of the data showed markedly tional basis there are fewer Black-owned firms,
negative impacts from the pandemic across all and existing Black firms are smaller than they
owners who are BIPOC. Concurrently, there should be after controlling for factors unrelated
are cases where adverse outcomes dispropor- to race (Tareque et al., 2021). The issue is com-
tionately accrued to Black-owned firms, even pounded by a growing wealth gap between Black
after controlling for revenues and firm age. As an households and White households that makes
illustrative example, in our sample Black-owned it harder to start and sustain any type of small
firms were the racial demographic that was least business venture. Though the wealth gap has
likely to indicate pre-pandemic approval for been on the rise for decades (Bradford, 2003),
financing. However, Black entrepreneurs were the trend was accelerated by the pandemic
concurrently the most likely to indicate a financ- (Singh, 2020).
ing need in the next 12 months.
Being more strategic and targeted with aid
As our analysis suggests, financing plays a key means ensuring programs are designed to close
role in supporting employment and the data socioeconomic gaps in high need populations.
offer preliminary support for strategies that We are cognizant that this might be difficult to
strategically target relief to Black- owned firms. do within the context of a disaster, and it may
Such initiatives would be equitable while also seem at odds to argue for aid accessibility con-
creating a notable economic impact across currently with our subsequent recommenda-
North Carolina. In making this recommendation, tion to emphasize the speed of aid distribution.
we must again note there is no question the However, such strategic adjustments for equity
pandemic exacerbated small business disparities purposes need not materially slow down the
for every type of marginalized constituency. But process or make it more complicated. Consid-
the data suggest that the level of inequity has er the hypothetical example of a disaster loan
been particularly notable for Black-owned firms program with two funding rounds in an area
who need additional help because they face the where 20% of small businesses are owned by
largest barriers to full recovery (Bloom et al., BIPOC individuals. In this hypothetical, after the
2021; Lahr et al., 2022; Misera, 2020). first funding round 10% of funds were deployed
to BIPOC-owned firms. We would recommend
The negative socioeconomic impacts observed the second round proactively set aside funds to
in our data reflect enduring racial disparities ensure at least 20% of total funds flow to BI-
that have long been a staple of entrepreneurial POC-owned firms.63
63
This type of adaptive design can also be time based – for example, “holding” funds for targeted populations for a period of
days before allowing applications from a broader constituency.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 39
2. Current and future assistance programs must be designed in a
manner that emphasizes both speed and application flexibility.

Because the pandemic’s effects escalated so recommendation #1 above, there are ways to do
quickly, aid programs were administered with a this while also keeping equity concerns in mind.
dizzying and constantly shifting array of During the pandemic, the main counterpoint to
requirements and restrictions. In many ways it prioritizing speed and minimizing applicant
seems that the requirements to receive burdens was concerns over fraud. Fraud, waste,
assistance reflected the current level of and abuse certainly occurred—but there is
economic urgency. When the economy was in insufficient evidence to suggest that the cost
freefall, policymakers and funders concentrated of such abuse was so high additional restric-
on quick aid distribution. But as public health tions should be used in future disaster aid relief.
concerns began to wane, new programs seemed For the most part, relative levels of waste in
to add restrictions and require more complex COVID-19 aid programs were low and generally
application processes (H. Hahn et al., 2021). related to the fact that initiatives with
unprecedented scope were launched in short
Our analysis suggests more restrictive aid time frames (Office of Inspector General,
processes simply make it harder to help those 2022).64 Attempting to prevent abuse by raising
who need it most. In future initiatives, whether application barriers and creating restrictions has
related to COVID-19 or other disasters, funding its own cost via creating additional inequities
organizations should err on the side of flexibility around aid access (Bailey & Sokolowski, 2022;
when providing small business relief. As noted in Howell et al., 2021).

64
While outside the scope of our analyses, we did not identify any cases of fraud, waste, or abuse across the loan and grant
awards in our sample. In the process of cleaning the data we did identify 6 cases (1% of the sample) where demographic
information was inconsistent. For example, a business was categorized as BIPOC-owned with 1 white owner. In every case
these inaccuracies appeared to be clerical errors, and all of them have been corrected in CSBDF’s data systems and the publi-
cized dataset.
doi: 10.46712/Extraordinary.Times 40
3. Financial institutions and philanthropic foundations should fund trials
of both grant only and combined grant/loan interventions.

Though our data are promising, information on towards evidence-based policy. For example, we
grant and loan interventions conducted during do not believe it necessary that future
the pandemic is limited. We particularly studies only be funded if they use “gold
recommend funding trials which combine small standard” methodologies like randomized
grants with larger loans, a model of intervention controlled trials (RCTs) or attempt to analyze
has shown promise when tested at a very small natural experiments. RCTs may not be desirable
scale (B. Johnson & Ward, 2016; McCall, 2021). in this case, as randomly assigning firms for
This might include something like providing a assistance amidst an active disaster (or recov-
grant equal to 10% of a loan’s approved amount, ery from one) poses an ethical quandary. More
which could be provided as cash aid or used as practically, RCTs and quasi-experimental designs
financing equity. also require a high level of resources and
organizational capacity, neither of which are
In arguing for the need to conduct additional plentiful in most CDFIs (Freedman, 2015;
research, we again call on the CDFI industry Galster et al., 2004; J. Hahn et al., 2001; Harger
and its funders to take an incremental approach et al., 2019; Lemieux & Milligan, 2008).

CSBDF & ResilNC | ExtraordinaryTimesReport.com 41
4. Public sector partnerships with community organizations were
highly effective, and they should be expanded/strengthened.

The severity of the pandemic as a public health Rubin, 2008; R. Shaffer et al., 2006). Because
and economic crisis launched countless part- these types of community organizations know
nerships between public entities and local local needs best, they can quickly adapt to
community organizations. These collaborations changing circumstances and enhance strategic
were forged by necessity and bolstered by wide- targeting of aid efforts (Simon, 2001).
spread successes (Williams, Brown-Graham, et
al., 2021). During the worst of the pandemic, Meaningful partnerships can be difficult to
research noted how effective collaborations maintain – they require a great deal of proactive
drew from stocks of organizational social capital management and relationship building at the
in ways that increased the adaptive and organizational and individual level. But if not
programmatic capacity of partnering entities utilized, the strong ties formed by the pandemic
(Williams, McCall, et al., 2021). across the public and non-profit sector will fray
with time (Ozanne & Ozanne, 2021).
But while COVID-19 normalized widespread Governments and community organization
leverage of nonprofit development entities, funders must keep forward momentum in this
such organizations have long been the bedrock area by bolstering existing partnerships and
of community stability and resiliency. CDFIs, identifying new opportunities to forge
CDCs, and similar types of organizations are collaborations. Building on these proven
vital partners in part because they have a unique strategies for success will enable a more holistic
ability to address gaps in a locale’s unmet and evidence-based response for both current
economic needs (Dorius, 2011; Mosley, 2019; recovery efforts as well as future crises.

doi: 10.46712/Extraordinary.Times 42
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community- development-organizations%E2%80%99-capacity-respond-covid-19-
theoretical-approach-strategic-use
Williams, T., McCall, J., Berner, M., & Brown-Graham, A. (2021). Beyond Bridging and Bonding: The
Role of Social Capital in Organizations. Community Development Journal, bsab025, 1–23.
https://doi.org/10.1093/cdj/bsab025
Wilson, D. B., Solomon, T. A., & McLane-Davison, D. (2020). Ethics and Racial Equity in Social Welfare
Policy: Social Work’s Response to the COVID-19 Pandemic. Social Work in Public Health, 35(7),
617–632. https://doi.org/10.1080/19371918.2020.1808145
Wu, Z., Chua, J. H., & Chrisman, J. J. (2007). Effects of family ownership and management on small busi-
ness equity financing. Journal of Business Venturing, 22(6), 875–895.
https://doi.org/10.1016/j.jbusvent.2006.07.002
Ziliak, S. T., & McCloskey, D. N. (2008). The Cult of Statistical Significance: How the Standard Error Costs Us
Jobs, Justice, and Lives. University of Michigan Press. https://doi.org/10.3998/mpub.18

doi: 10.46712/Extraordinary.Times 56
APPENDIX I.
SUPPLEMENTARY DATA

ADDITIONAL TABLES
Table A1. Financing Declines Before the Pandemic Ranked Pairwise Tests (n = 97)

Average Effect Size Sample
Group 1 Group 2 P-Value
Difference Cohen’s f 1 2
Black White -0.372 0.001*** -0.861 59 29
White Asian 0.181 0.882 0.643 29 4
Asian Black 0.191 0.870 0.387 4 59

Table A2. Level of FTE Employment at Time of Survey Ranked Pairwise Tests (n = 494)

Average Effect Size Sample
Group 1 Group 2 P-Value
Difference Cohen’s f 1 2
Grantee Borrower -2.61 0.001*** -0.58 419 75
Borrower Received Both -3.01 0.213 -0.48 75 18
Received Both Grantee -0.41 0.900 0.10 18 419

PREDICTORS OF EMPLOYMENT VARIATION REGRESSION MODEL

The FTE jobs model is an ordinary least squares (OLS) regression and, as such, makes numerous
assumptions about how the data approximates a normal distribution. The model incorporates
unedited survey data with two exceptions, both of which represent standard practice to improve
model fit (Pituch & Stevens, 2015):

1 Imputations: To minimize excessive imputations, the model only includes fully complete
surveys (n = 487). However, because of cases where control variables from external data
sources had missing values, 3% of rows were imputed. Missing data were replaced with
imputed means or medians (in cases of severe outliers) for each variable.

2 Transformations: Numerical variables with data that violated regression assumptions
about normal distribution have been transformed be taking logged values and are flagged
as such with “log(x).” In cases where the variable had non-missing “0” values, data were
transformed using log plus one as indicated by “log(x) + 1.”

CSBDF & ResilNC | ExtraordinaryTimesReport.com 57
Table A3. Predictors of Variation in Respondent’s Current Employment Level (n=487)
R2 Adjusted R2 Standard Error Coefficient of Variation P-Value
0.399 0.380 13.804 2.447 0.000

Relative Weights Unstandardized Standardized
Independent Variables p
Lower 95% CI Upper Lower 95% CI Upper Lower 95% CI Upper
Social Capital Score
0.2% 0.4% 1.9% -0.497 -0.116 0.224 -0.115 -0.027 0.055 0.267
log(x) + 1
# Trust Sources
0.1% 0.6% 4.6% -0.186 -0.028 0.079 -0.105 -0.017 0.049 0.571
log(x) + 1
Mean Operating
0.1% 0.1% 1.4% -0.040 -0.010 0.034 -0.084 -0.022 0.075 0.840
Conditions Score
Respondent Firm’s
60.8% 74.4% 80.0% 0.068 0.099 0.141 0.312 0.423 0.581 0.000
Gross Revenues***
Cash on Hand
0.1% 0.4% 1.9% -0.034 0.002 0.020 -0.104 0.005 0.059 0.740
For Business Bills

Will Apply for a Loan in Next 12 Months?

Yes, Plan to Apply -0.018 0.037 0.162 -0.021 0.042 0.186 0.139

No, Don’t Plan to Apply* 0.3% 1.6% 5.5% -0.027 0.028 0.119 -0.038 0.041 0.172 0.059

Don't Know (Baseline)

Approved for Loan Before January 2020?

Approved for Financing** 0.012 0.091 0.153 0.013 0.093 0.159 0.017
1.7% 4.8% 10.9%
Denied for Financing -0.105 0.016 0.116 -0.072 0.011 0.084 0.961

Control Variables

Type of COVID-19 Aid Received

CSBDF Borrower* -0.014 0.065 0.279 -0.014 0.068 0.289 0.077

CSBDF Grantee 1.4% 5.3% 11.9% -0.080 -0.024 0.164 -0.092 -0.028 0.196 0.171

Received Both (Baseline)

# Aid Programs
1.2% 3.7% 7.1% 0.000 0.021 0.035 0.000 0.070 0.121 0.506
Applied For
# Aid Programs
2.4% 6.5% 10.8% 0.013 0.032 0.047 0.041 0.094 0.146 0.274
Approved For
Age of Firm
0.6% 2.2% 4.7% -0.068 0.057 0.117 -0.058 0.049 0.097 0.648
(Months) log(x) + 1
Business Location
0.1% 0.1% 3.4% -0.108 0.030 0.111 -0.107 0.028 0.105 0.795
in Rural County
Statistically significant at ***p < 0.01, **p < 0.05, or *p < 0.10
doi: 10.46712/Extraordinary.Times 58
APPENDIX II.
SURVEY QUESTIONS
DISTRIBUTION AND QUESTION FORMAT corded values, but sufficiently different from
the “real” values to protect confidentiality.
The survey instrument was disseminated Noise flags were applied to each respondent’s
through Qualtrics, and online survey platform. firm start date, all job and employment hour
Respondent firms were shown one question counts, award date(s), and amount of award(s).
per page, and if a question was required it had A Pearson’s correlation test between the orig-
to be responded to before proceeding. Back inal data and the deidentified values shows
buttons were available so that respondents coefficients ranging from 0.970 to 0.981.66
could change previous answers at any time.
Qualtrics saves answers to the user’s browser There are some values which cannot be pub-
cache, which enables respondents to close lished because there is no way to protect
a survey window and return to where they respondent confidentiality through noise flags
stopped when subsequently accessing the or other suppression techniques. The follow-
survey link. ing datapoints were collected as part of our
analysis but not published: respondent IP ad-
ANONYMIZED PUBLICATION OF DATA dress, respondent longitude and latitude, re-
spondent name, firm name, and name of grant/
As part of CSBDF’s commitment to transpar- and or loan program(s) awarded. Additionally,
ent and accountable research, anonymized any open text entered has been omitted.
data for all research reports is published via
the organization’s Harvard Dataverse. We ABOUT THE SURVEY QUESTIONS LIST
publish the data for two reasons. First, we
strongly believe that community economic The list of survey questions is below. Depend-
development data should be publicly avail- ing on firm characteristics and how questions
able so that the results can be replicated and were answered, certain parts of the survey
verified by anyone. Second, our work in this not shown due to Display Logic: or were
area seeks to broaden the scope of knowledge bypassed using Skip Logic. Additionally,
about how to best assist small businesses, and some questions had Validation Checks
we thus invite other researchers to use the which required entered values to be within
data to achieve that goal. certain ranges. To prevent bias that might
occur from showing all respondents answer
To ensure confidentiality, the published data- choices in the same order, where possible
set was anonymized by adding noise flags to questions used Randomization. The survey
any value that could potentially unmask a instrument was personalized and displayed
respondent via triangulation.65 This means a information to each respondent. The ques-
small random number was added or subtract- tions below indicate when this occurred with
ed to the data to intentionally obfuscate the brackets. For example, [Business Name] means
original value. As a result of these changes, the the respondent’s firm name was displayed to
published data are materially similar to re- them.

65
Data triangulation means attempting to unmask a respondent by combining an array of values from multiple datasets. For
example, award amounts have a noise flag applied so that a record cannot be linked to information that might be obtained via
public records requests.
66
A value of 1.00 would indicate two data series are perfectly correlated and move together in a lockstep positive (+1.00) or
inverse (-1.00) manner.

CSBDF & ResilNC | ExtraordinaryTimesReport.com 59
SECTION 1. SURVEY INTRODUCTION AND INCENTIVE EMAIL

Q1.1: Introduction Statement

Why am I being contacted?
Carolina Small Business Development Fund (CSBDF) provided [Business Name] with [Amount] in
pandemic aid from the [CSBDF Grant or Loan Program] Program(s). We’re conducting research to
learn more about how you and other entrepreneurs utilized financial assistance throughout the
COVID-19 emergency.

How will my answers be used?
Your responses will help us assess the needs of entrepreneurs and explore how disaster response
programs can be improved in the future. Any information you choose to provide is confidential.
We hope you will choose to provide us feedback, but your participation in the survey is strictly
voluntary. No information you provide will be used or considered in current or future financial
assistance programs offered by CSBDF.

Why are you doing this survey?
CSBDF is committed to strengthening North Carolina’s small business ecosystems through evi-
dence-based research and policy recommendations. This project is being managed by CSBDF’s
independent research staff in conjunction with our partners at ResilNC, a nonprofit collaborative
that supports North Carolina’s Black business ecosystem through data driven insights, policy
investment recommendations, and thoughtful convenings.

Q1.2 – Confirm Email

The below email address will receive the $10 gift card for completing this survey. If you’d like to
send it somewhere else, please enter a new email below.

OPEN ENDED TEXT BOX

doi: 10.46712/Extraordinary.Times 60
SECTION 2. USE OF ASSISTANCE FUNDS

Q2.1 – Use of Financial Assistance Q2.2 – Allocation of Funds

 Randomization: Answer choice order  Display Logic: Not shown if Funds have Not
was randomized. Been Utilized Yet was selected in or only one
use of funds was selected in Q2.1.
How were the proceeds from [Business
Name]’s [Grant or Loan Program Name Validation Check: The sum of all entered
1] for [Amount 1] utilized? Check all that values must be 100.
apply.
What percentage of the [Amount 1] [Grant or
 Business Acquisition Loan Program Name 1] proceeds went to pay
 Cashflow Needs for the below business expenses?
 Machinery and Equipment
 Leasehold Improvements Business Acquisition XX%
 Refinanced Business Debt Cashflow Needs XX%
 Inventory and Supplies Machinery and Equipment XX%
 Working Capital Leasehold Improvements XX%
 Real Estate Purchases Refinanced Business Debt XX%
 Other (Please Describe): Inventory and Supplies XX%
 Funds Have Not Been Utilized Yet Working Capital XX%
[Exclusive Answer Choice] Real Estate Purchases XX%
Other (Please Describe): XX%
Total: 100%

Q2.3 – Use of Financial Assistance

 Display Logic: Not shown if the respondent did not receive assistance from a second CSBDF
grant or loan program.

 Randomization: Answer choice order was randomized.

How were the proceeds from [Business Name]’s [Grant or Loan Program Name 2]
for [Amount 2] utilized? Check all that apply.

 Business Acquisition  Working Capital
 Cashflow Needs  Real Estate Purchases
 Machinery and Equipment  Other (Please Describe):
 Leasehold Improvements  Fund Have Not Been Utilized Yet [Exclusive]
 Refinanced Business Debt
 Inventory and Supplies

CSBDF & ResilNC | ExtraordinaryTimesReport.com 61
Q2.4 – Allocation of Funds Q2.5 – Use of Financial Assistance

 Display Logic: Not shown if the respon-  Display Logic: Not shown if the respon-
dent did not receive assistance from a second dent did not receive assistance from a third
CSBDF grant or loan program. CSBDF grant or loan program.

 Display Logic: Not shown if Funds have Not  Randomization: Answer choice order was
Been Utilized Yet was selected in or only one randomized.
use of funds was selected in Q2.3.
How were the proceeds from [Business
Validation Check: The sum of all entered Name]’s [Grant or Loan Program Name 3] for
values must be 100. [Amount 3] utilized? Check all that apply.

What percentage of the [Amount 2] [Grant or  Business Acquisition
Loan Program Name 2] proceeds went to pay  Cashflow Needs
for the below business expenses?  Machinery and Equipment
 Leasehold Improvements
Business Acquisition XX%  Refinanced Business Debt
Cashflow Needs XX%  Inventory and Supplies
Machinery and Equipment XX%  Working Capital
Leasehold Improvements XX%  Real Estate Purchases
Refinanced Business Debt XX%  Other (Please Describe):
Inventory and Supplies XX%  Fund Have Not Been Utilized Yet [Exclusive]
Working Capital XX%
Real Estate Purchases XX%
Other (Please Describe): XX%
Total: 100%

Q2.6 – Allocation of Funds What percentage of the [Amount 3] [Grant or
Loan Program Name 3] proceeds went to pay
 Display Logic: Not shown if the respondent for the below business expenses?
did not receive assistance from a third CSBDF
grant or loan program. Business Acquisition XX%
Cashflow Needs XX%
 Display Logic: Not shown if Funds have Not Machinery and Equipment XX%
Been Utilized Yet was selected in or only one Leasehold Improvements XX%
use of funds was selected in Q2.5. Refinanced Business Debt XX%
Inventory and Supplies XX%
Validation Check: The sum of all entered Working Capital XX%
values must be 100. Real Estate Purchases XX%
Other (Please Describe): XX%
Total: 100%

doi: 10.46712/Extraordinary.Times 62
SECTION 3: APPLICATIONS AND APPROVALS FOR OTHER COVID AID

Q3.1 – Applications for Other COVID-19 Aid

Excluding the [Total Amount]67 assistance you received from CSBDF, did [Business Name] apply for
other COVID-19 assistance listed below? Check all that apply.

Federal Assistance Programs Other Assistance Programs
 Paycheck Protection Program  Local Government COVID-19 Relief Loan
 Economic Injury Disaster Loan Program
 Restaurant Revitalization Grant  Local Government COVID-19 Grant
 Any other (Please Describe):
State Assistance Programs
 Rapid Recovery Loan No Other Assistance Applied For
 Job Retention Grant  Didn’t Apply for Aid [Exclusive]
 Business Recovery Grant
 Mortgage, Utility, and Rate Relief Program

Q3.2 Results of COVID-19 Applications

 Display Logic: Not shown if answer to Q3.1 is We Didn’t Apply for Any Other Pandemic Aid.

 Randomization: Answer choice category group was randomized.

For which of the below assistance programs was [Business Name] approved? Check all that apply.
If you applied for the same program more than once (for example, the Paycheck Protection Pro-
gram) only check the box if you were approved for the most recent application.

Federal Assistance Programs
 Paycheck Protection Program
 Economic Injury Disaster Loan
 Restaurant Revitalization Grant

State Assistance Programs
 Rapid Recovery Loan
 Job Retention Grant
 Business Recovery Grant
 Mortgage, Utility, and Rate Relief Program

Other Assistance Programs
 Local Government COVID-19 Relief Loan Program
 Local Government COVID-19 Grant
 Any other (Please Describe):

No Other Assistance Applied For
 We Didn’t Apply for Any Other Pandemic Aid
[Exclusive Answer Choice]
CSBDF & ResilNC | ExtraordinaryTimesReport.com 63
Q3.3 – Other COVID-19 Assistance

 Display Logic: Not shown if answer to Q3.1 is We Didn’t Apply for Any Other Pandemic Aid.

[Business Name] received [Total Amount] in total assistance from CSBDF. Had you been approved
for any other COVID-19 assistance at the time you received aid from CSBDF? If you had been ap-
proved for a loan or grant but funds had not been dispersed on the date you requested
assistance from CSBDF, select yes.

 Yes
 No
 Don’t Remember

Q3.4 – Previous Financing Applications Q3.5 – Outcome of Financing Applications

Before February 2020, had [Business Name]  Display Logic: Not shown if the answer to
applied for small business financing of any type? Q3.4 is No or Don’t Know.

 Yes What was the result of [Business Name]’s
 No most recent application for small business
 Don’t Remember financing?

 Yes
 No
 Don’t Remember

doi: 10.46712/Extraordinary.Times 64
SECTION 4. CURRENT EMPLOYMENT LEVELS

Q4.1 – Existing Employment Positions

Validation Check: Entered values for each category must range between 0 and 100.

How many individuals are employed at [Business Name] as of [Current Date]? Enter “0” if a field does
not apply because you do not have any employees in the listed category. An employed individual
means:
 All individuals receiving payroll compensation from the business.
 The owner(s) of the firm, if they receive any compensation from the operation of the
business or plan to in the next 2 years.
 Do not count any contract positions.

Individuals(s) employed full-time (35+ hours/week): XX Employees
Individuals(s) employed part-time (1-34 hours/week): XX Employees
Individual(s) employed seasonally (1-11 months/year): XX Employees

Q4.2 – No Currently Employed Individuals

 Display Logic: Not shown unless 0 values entered for full-time, part-time, and seasonal
employees in Q4.1.

 Skip Logic: If yes is selected, all other questions in section 4 are skipped.

You have indicated [Business Name] has 0 current employees of any type. Does this mean the
business has closed?

Note: If you selected 0 employees because the only individual(s) performing compensable duties are the
owner(s), enter the number of owners instead. Owners who work on the business are considered
employees if they are currently compensated in any form or plan to draw compensation in any form in
the future.

 Yes
 No

CSBDF & ResilNC | ExtraordinaryTimesReport.com 65
Q4.3 – Full-Time Employee Hours Q4.5 – Seasonal Employee Time Period
 Display Logic: Not shown unless the value  Display Logic: Not shown unless the value
for full-time employees in Q4.1 is greater for employees working 1 to 11 moths per
than or equal to 1. year in Q4.1 greater than or equal to 1.

Validation Check: Entered value must Validation Check: Entered value must
range between 35 and 80. range between 1 and 11.

How many hours do each of [Business How many months of the year do [Business
Name]’s [Number of Full-Time Employees Name]’s [Number of Seasonal Employees
from Q4.1] permanent full-time employee(s) from Q4.1] temporary employee(s) work on
work on average each week? average?

Q4.4 - Part-Time Employee Hours Q4.6 – Seasonal Employee Hours
 Display Logic: Not shown unless the value  Display Logic: Not shown unless the value
for part-time employees in Q4.1 is greater for employees working 1 to 11 moths per
than or equal to 1. year in Q4.1 greater than or equal to 1.

Validation Check: Entered value must Validation Check: Entered value must
range between 1 and 34. range between 1 and 80.

How many hours do each of [Business How many hours do each of [Business
Name]’s [Number of Part-Time Employees Name]’s [Number of Seasonal Employees
from Q4.1] permanent part-time employee(s) from Q4.1] work per week on average during
work on average each week? the [Months Value from Q4.5] month
seasonal employment period?

doi: 10.46712/Extraordinary.Times 66
SECTION 5 – ALL OTHER QUESTIONS

Q5.1 – Most Recently Filed Tax Period
 Note: Choices were presented as a dropdown box to respondents.

What is [Business Name]’s most recently completed federal tax return year?
 2018
 2019
 2020
 2021

Q5.2 – Gross Annual Revenues in Most Q5.3 – 2019 Gross Annual Revenues
Recently Filed Tax Period
 Display Logic: Not shown unless the
What range best represents [Business respondent firm’s start date was 2019 or
Name]’s gross annual revenues as indicated earlier.
on its [Tax Year Entered in Q5.1] federal tax
returns? What were [Business Name]’s gross annual
revenues as indicated on its 2019 federal
 $0 tax returns?
 $1 to $50,000
 $50,001 to $100,000  $0
 $100,001 to $250,000  $1 to $50,000
 $250,001 to $500,000  $50,001 to $100,000
 $500,000 or more  $100,001 to $250,000
 $250,001 to $500,000
 $500,000 or more

67
Total amount is the dollar value sum of all aid received from CSBDF.
CSBDF & ResilNC | ExtraordinaryTimesReport.com 67
Q5.4 – Business Operating Conditions

 Display Logic: Not shown if answer to Q4.2 is Yes and firm is not operating.

Please indicate your level of agreement with the statements below about [Business Name]’s
business operations as of [Current Date].
Strongly Strongly Not
Agree Undecided Disagree
Agree Disagree Applicable
We are able to recruit and retain
     
qualified employees.
We can get business financing
     
when needed.
We have no issues in finding business
     
supplies.
We have no concerns about another
     
COVID-19 surge.
We anticipate increasing demand for
     
our services.
We are able to recruit and retain
     
qualified employees.
We can get business financing when
     
needed.

Q5.5 – Cash for Operating Expenses Q5.6 – Projected Capital Needs

 Display Logic: Not shown if answer to  Display Logic: Not shown if answer to
Q4.2 is Yes and firm is not operating. Q4.2 is Yes and firm is not operating.

How long could [Business Name] pay for Thinking about [Business Name]’s busi-
its expenses using cash on hand if it had no ness needs over the next 12 months, do you
revenue generating activities? anticipate needing financing or investment
from external sources? This includes any
 Less than 30 Days anticipated needs for equity investment,
 30 to 60 Days business credit cards, lines of credit, and/or
 60 to 90 Days term loans.
 More than 90 Days
 Yes
 No
 Don’t Remember

doi: 10.46712/Extraordinary.Times 68
Q5.7 – Anticipated Uses of Capital/Investment

 Display Logic: Not shown if answer to Q4.2 is Yes and firm is not operating.

 Display Logic: Not shown if answer to Q5.6 is No or Don’t Know.

 Randomization: Answer choice order was randomized.

What was the primary reason for [Business Name]’s expected credit/investment needs over the
next 12 months?

 Business Acquisition  Inventory and Supplies
 Cashflow Needs  Working Capital
 Machinery and Equipment  Real Estate Purchases
 Leasehold Improvements  Other (Please Describe):
 Refinanced Business Debt

Q5.8 – Sources of Business Information

 Randomization: Answer choice order was randomized.

Thinking about the below organizations in your community, would you consider any of them as
trustworthy and likely to provide you with the right information on business management and/or
financing? Select all that apply.

 Business Institutions  Other Organization (Please Describe):
 Community Credit Unions  Other Individual (Please Describe):
 Community College Programs  Real Estate Purchases
 Other Small Business Owners  I don’t consider any of these trustworthy
 Chambers of Commerce or likely to provide correct information.
[Exclusive]

CSBDF & ResilNC | ExtraordinaryTimesReport.com 69
Q5.9 – Views on Your Community

 Randomization: Statement order was randomized.

Please indicate your level of agreement with the following statements.

Strongly Strongly Not
Statements Agree Undecided Disagree
Agree Disagree Applicable

The local community supports
     
entrepreneurs like me.

If my business runs into trouble,
     
I know where to go for help.

My neighborhood’s small business
     
owners help each other.

Most people in my community can
     
be trusted.

If my community has a problem,
     
we work together to solve it.

End of Survey Message

 Note: Responses were marked completed when respondents saw this message.

Your response has been recorded. Thank you for helping us better serve North Carolina’s entre-
preneurial community.

You will receive an email from our vendor with a link to your survey reward. Remember to check
your spam folder if you don’t see it. If you haven’t received an email within 24 hours, please contact
TangoCards.

doi: 10.46712/Extraordinary.Times 70
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