Small Business Success Outcomes: Do Loans and Grants Increase Success?
Abstract
This thesis is comprised of two essays that focus on small business success outcomes by investigating on the effects of loans and grants to their business performance. Essay 1: The Effect of Small Business Administration (SBA) Disaster Loans on Revenues of Small Businesses in Mississippi after Hurricane Katrina. The US government provided $2.6 billion of Small Business Administration (SBA) disaster loans to individuals and businesses in Mississippi after Hurricane Katrina in 2005 (FEMA 2015). However, existing literature has not fully explored the firm-level effects of post-disaster loan aid, specifically, the effect on small businesses. The objective of this article is to examine whether SBA disaster loans played a significant role in the performance of small businesses after Hurricane Katrina. Data from a sample of 315 small businesses in Mississippi that were operating before Hurricane Katrina and still operating in 2013 were used in the analysis. Two hypotheses were tested: 1. Small business owners that received SBA disaster loans have higher revenue change compared to before Katrina than those who did not receive the loan; 2. Small business owners that received SBA disaster loans perceived their businesses to have higher revenue than before Katrina. Receiving a SBA disaster loan did not play a statistically significant role in determining the actual revenue change or owners’ perception of revenue. Essay 2: Economic viability of shared-use kitchens. There are growing interests in local food in the US (Martinez 2010). Alonso and O’Neill (2011) argued that selling value-added products by using commercial kitchens became more and more important. This article focused on one type of commercial kitchen called shared-use kitchens. A shared-use kitchen is a commercial kitchen that local food entrepreneurs and caterers can use to prepare and process their food, and it is usually rented by the hour (Leopold Center for Sustainable Agriculture 2014). The purpose of this article is to identify the characteristics of shared-use kitchens and the demographics of owners/managers. Data collected by Purdue University from March to April 2017 is used in the analysis. In addition to the descriptive statistics, t-tests and chi-square tests were conducted to see associations between various factors. The results indicated several key findings. For example, kitchen owners with grant funding tended to be less profitable, tended to have community-oriented goals for their business, and their business tended to be their main source of income compared to kitchens without grant funding. These results are a good first step to comprehend the complexity of current shared-use kitchen businesses in the US.
Degree
M.S.
Advisors
Marshall, Purdue University.
Subject Area
Economics|Commerce-Business
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