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Everyone Will Need to Become an Entrepreneur – Association for Psychological Science – APS

Federal Investment in Small Businesses Could Revive Economy After the Pandemic

Do policy makers take grants for granted? The efficacy of public sponsorship for innovative entrepreneurship Published on March 04, 2021 Recent efforts to support businesses reeling from revenues lost during the pandemic, such as grants and loan programs, have been criticized for favoring larger companies. New research finds that federal agencies get more bang for their buck when they channel grant dollars into smaller startups. Researchers at Indiana University, Washington State University and the University of Central Florida say their work could provide valuable insights as federal and state governments look for ways to revive the U.S. economy after the pandemic, like the recent Paycheck Protection Program loans.

Fed money to smaller companies boosts the economy more

New research finds that federal agencies get more bang for their buck when they channel grant dollars into smaller startups. Recent efforts to support businesses reeling from revenues lost during the pandemic, such as grants and loan programs, have been criticized for favoring larger companies. The researchers say their work could provide valuable insights as federal and state governments look for ways to revive the US economy after the pandemic, like the recent Paycheck Protection Program loans. The study tracked results from about 130 ventures at eight business incubators in the southeastern United States over a four-year period. Small companies receiving their first grant experienced strong revenue growth an average of 1,000% over two years.

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