Financial Access Initiative (FAI) Launches Research on Small Firms in the United States

The Financial Access Initiative (FAI), housed at the NYU Wagner Graduate School of Public Service, together with the Mastercard Center for Inclusive Growth through the Mastercard Strive small business program, announced the launch of the Small Firm Diaries USA, a study that aims to shed light on the realities faced by small businesses across the country. Researchers will undertake a deep dive into the financial lives of 75 to100 businesses, focusing on entrepreneurs in low-income communities. Data collection will begin in mid-2025 in six cities—Atlanta, Baltimore, Chicago, New York City, Oakland, and St. Louis, as well as rural communities country-wide—and will continue for a full year.

The study seeks to inform policy and practice focused on supporting small firms in low-income neighborhoods in the United States. Researchers aim to enable lenders (including CDFIs and commercial banks), community development organizations, funders and policy makers to design products and programs to better support these firms, allowing owners to both increase their household wealth, and to provide more and better jobs in their communities. 

The study applies a mixed-methods financial diaries approach to better understand the specific opportunities and challenges that small firms face. Researchers will learn about business owners’ aspirations for their business, their strategies for responding to external shocks, and how they make decisions to employ workers, among many other topics. This study offers insights into the financial journeys of entrepreneurs working hard to build and thrive in today’s America—from car mechanics in Oakland, to childcare providers in St. Louis, to home contractors in Atlanta.

“There are plenty of platitudes about entrepreneurship in the United States, but wrestling with the reality of high failure rates of small businesses alongside the labor market struggles of low-income workers is rare,” said Tim Ogden, the Managing Director of the Financial Access Initiative. “It’s critical to gain deep insight into the daily, weekly and monthly challenges and needs of businesses in low-income neighborhoods and their workers to help these often-neglected firms thrive.”

The Small Firm Diaries USA is a new arm of a larger, existing research initiative, the Global Small Firm Diaries, which has been active in 7 countries starting in 2021. There are significant commonalities in the challenges and needs facing households and firms in low income areas around the world, including within the United States. Adding US data to the global project will afford researchers insight into these shared challenges, and shared solutions to these challenges.

“It’s a critical time in the US to understand how small businesses—a source of vitality and employment in low-income and marginalized communities—respond to forces that are rapidly changing the shape of global and local economies,” said Jonathan Morduch, Professor of Public Policy and Economics at NYU Wagner and Executive Director of the Financial Access Initiative. “As in the global study, our aim here is to listen—to pay close attention to how business owners manage uncertainty and volatility, how they make decisions about employing workers, and how those decisions affect the workers themselves.”

FAI is partnering with EA Consultants, experts in research into the financial lives of low-income households. The research team is also collaborating with business support organizations, CDFIs and other financial institutions, and local researchers in each of the 6 cities. The study is guided by a national board and receives funding from JPMorganChase, the Mastercard Center for Inclusive Growth, and the Aspen Institute Economic Opportunities Program.

To learn more about the project, see publications from the global study, and subscribe to research updates go to www.smallfirmdiaries.org/usa.