Crop damage, local climate risk perceptions, and small business access to credit

Abstract

This paper examines the impact of natural disasters on Small Business Administration (SBA) 7(a) loan originations, highlighting how such events influence lenders' perceptions of climate and thus affect credit access for small businesses. We find a significant reduction in SBA loan originations in disaster-affected counties, suggesting a more cautious approach by lenders. This paper also explores how geographical diversification and minority ownership affect loan origination and investigates the role of public climate belief in shaping lending activities. The findings highlight the important connection between natural disasters and bank lending decisions, offering valuable insights into the challenges small businesses face in areas affected by climate change.