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Crowdlending, Self-Employment, and Entrepreneurial Performance

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  • Douglas Cumming
  • Ahmed Sewaid

Abstract

Access to finance is crucial for sustaining entrepreneurial activity. Elaborating on resource dependence theory, we argue that the adverse impact of a loan rejection by a crowdlending platform is more severe than that of a rejection by a traditional financial institution. The data indicate that a failed crowdlending loan attempt is associated with a 14.80% increase in the probability of transitioning out of self-employment. This effect is 1.62 times that of revolving lines of credit and 3.08 times that of non-revolving lines of credit. We highlight that these effects are amplified for marginal borrowers and credit- and income-constrained entrepreneurs. In addition, we show that successful crowdlending enhances self-employed individuals’ future income and future access to traditional lines of credit. Implications for policy and practice are discussed.

Suggested Citation

  • Douglas Cumming & Ahmed Sewaid, 2025. "Crowdlending, Self-Employment, and Entrepreneurial Performance," Entrepreneurship Theory and Practice, , vol. 49(2), pages 403-434, March.
    • Handle: RePEc:sae:entthe:v:49:y:2025:i:2:p:403-434
    DOI: 10.1177/10422587241270596
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