Small businesses often struggle to access funding. A new report examines what that means for Appalachia.

Despite having a significant impact on local economies, small businesses in West Virginia and Appalachia face barriers when trying to access funding, according to a new report published Tuesday.

The report, which was released by the Appalachian Regional Commission and put together by small business advisor firm Next Street, examines how small businesses in the 13-state region access credit and capital. Researchers found that small businesses are often seen as riskier investments, making it harder for them to access the financial support needed to survive.

“For small businesses to continue to grow and strengthen the local economy, it is imperative that we better understand and address the unique challenges faced by our Appalachian business owners and take action to meet those challenges head-on,” Gayle Manchin, federal co-chair of the Appalachian Regional Commission, said in a statement.

The report comes as entrepreneurs and small business owners in West Virginia look to find new funding sources to launch and expand their businesses. It supports recent reporting by Mountain State Spotlight in which new business owners said that despite a number of resources at both the state and local level, it can be difficult to figure out where to start, putting new entrepreneurs at a disadvantage.

Small businesses make up an overwhelming majority — more than 99 percent — of businesses in Appalachia. Of the more than 1.8 million small businesses in the region, nearly 400,000 are defined as micro businesses, meaning that they employ 10 employees or less. Collectively small businesses employ roughly half of the regional workforce.

Supporting these businesses then, is a crucial way to improve local economies and expand job opportunities. Even so, accessing the money to run a small business can be difficult, largely due to differences in what capital is available and how much is needed, limited funding opportunities, and an inconsistent network of resources in the region.

The commission’s report further supports this argument, noting that roughly 83 percent of businesses in Appalachia have been around for at least 10 years. And while that means that businesses in the area have longevity, that can also make it harder for newer businesses to get the attention and resources needed to stick around.

To address this, the report encourages states within the region to find new ways to support small businesses, particularly micro businesses. It adds that creating new funding options that do not rely on the traditional loans most often provided by banks, like venture capital funding and private equity investment, could be particularly helpful.

And beyond that, overcoming geographic challenges, addressing broadband access issues, and closing information gaps about available resources are all necessary for small businesses to thrive.

“As the small business landscape continues to shift throughout Appalachia to respond to emerging industries, and existing Main Street businesses endure a challenging interest rate environment, ensuring entrepreneurs are connected to the right resources will be crucial,” the report concludes.

Small businesses often struggle to access funding. A new report examines what that means for Appalachia. appeared first on Mountain State Spotlight , West Virginia's civic newsroom.