Graduation Year

2026

Date of Submission

12-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Nishant Dass

Abstract

The United States Small Business Administration (SBA) is a government organization founded in 1953 that plays a central role in disaster response by providing capital contracts and low-interest loans to affected firms and households. This thesis will examine whether the SBA’s disaster lending program supports county-level economic recovery in the aftermath of a disaster period. My initial hypothesis is that after a natural disaster, an increase in SBA loan activity should help mitigate income losses and support economic recovery, leading to a consistent level of county-level Adjusted Gross Income (AGI) growth in future years. Using a constructed dataset that links the IRS AGI data with SBA disaster loan activity for U.S. counties from 2002-2022, I tested a series of fixed-effects regressions that examine county-level income variation over time while controlling for nationwide macroeconomic shocks. The results show that disasters cause measurable short-run income declines. There is approximately a 0.4 percentage point drop in next year’s AGI growth while higher SBA loan volumes mitigate some of these losses. Although the positive association between SBA lending and post-disaster income growth is statistically significant, its effect is relatively minimal, suggesting that SBA support provides limited county-level economic relief. These findings indicate that SBA disaster lending helps cushion local economies but is insufficient as a standalone source of federal funding to fully offset the income shocks generated by natural disasters.

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