From Crisis to Opportunity: Financing for Underserved Small Businesses Since COVID-19

Market Context Report

Report Summary

This report delves into the evolving landscape of small business lending following the pandemic, identifying significant trends that are shaping the lending ecosystem. It underscores the unprecedented injection of capital into the small business lending sector through pandemic relief efforts and initiatives centered on racial justice, which led to substantial growth and accelerated technology adoption, especially among mission-based lenders. The report also highlights the challenges posed by economic volatility, supply chain shortages, elevated inflation, and climbing loan delinquencies, resulting in tightened loan criteria and market consolidation, thus constraining credit for small businesses. Despite these obstacles, the report points out continued high rates of small business formation, particularly among entrepreneurs of color, emphasizing the resilience of small businesses in the midst of economic uncertainties.

As the economy improves going forward, lenders will face critical decisions about how much to adjust their standards and invest in system improvements to meet the capital needs of more small businesses, particularly those formed since the pandemic, including minority and women entrepreneurs. 

Subsequent to this report, FinRegLab will analyze the use of bank account data and other non-traditional information sources to make small business underwriting models more accurate and inclusive, highlighting the potential for growth and innovation in the small business lending sector.


This report is part of a broader research project to evaluate ways to improve credit access through the use of non-traditional data sources and mission-based lenders such as minority depository institutions, community development financial institutions, and other mission- and community-based lenders. We are working with Sabrina Howell of New York University and Emmanuel Yimfor of Columbia University on related empirical analyses. 

Many of the insights in this report were derived from interviews with stakeholders in the financial services, technology, and civil society sectors. FinRegLab would like to thank stakeholders who participated in interviews and discussions, including members of our project Advisory Board. 

We would also like to thank individuals who provided valuable feedback on this report. They include:

Todd Baker

Columbia University

Patrick Davis

Community Reinvestment Fund

Gadi Meir

Wells Fargo

Ryan Metcalf

Funding Circle

Sandip Nayak

Quantum Financial Technologies (Parent Company of Fundation & Camino)

Natasha Sim O’Keefe

National Community Reinvestment Coalition (NCRC)

Brett Simons

Scale Link

Eric Weaver


Lastly, we would like to acknowledge the FinRegLab team for their work in writing this report:

Paula Ochiel

Senior Research Analyst

Karla Renschler

Senior Manager of Small Business Research

Kelly Thompson Cochran

Deputy Director and Chief Program Officer

With Support From

This research initiative is funded by a grant from the U.S. Department of Commerce, Minority Business Development Agency, and support from Visa. In addition, Plaid will provide free account connectivity services to pilot programs by mission-based lenders to allow loan applicants to authorize their account data to be accessed for underwriting.

Minority Business Development Agency

The mission of the Minority Business Development Agency is to promote the growth of minority business enterprises through the mobilization and advancement of public and private sector programs, policy, and research

Visa Inc.

Visa (NYSE: V) is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative, convenient, reliable and secure payments network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone everywhere, uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at


Plaid is a global data network that powers the tools millions of people rely on to live a healthier financial life. Our ambition is to facilitate a more inclusive, competitive, and mutually beneficial financial system by simplifying payments, revolutionizing lending, and leading the fight against fraud. Plaid works with thousands of companies including fintechs like Venmo and SoFi, several of the Fortune 500, and many of the largest banks to empower people with more choice and control over how they manage their money. Headquartered in San Francisco, Plaid’s network spans over 12,000 institutions across the US, Canada, UK and Europe.

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About FinregLab

FinRegLab is an independent, nonprofit organization that conducts research and experiments with new technologies and data to drive the financial sector toward a responsible and inclusive marketplace. The organization also facilitates discourse across the financial ecosystem to inform public policy and market practices. To receive periodic updates on the latest research, subscribe to FRL’s newsletter and visit Follow FinRegLab on LinkedIn and Twitter (X). | 1701 K Street Northwest, Suite 1150, Washington, DC 20006