The frequent occurrence of crisis events such as natural calamities and catastrophe, pandemics, particularly COVID-19, has significantly interrupted the entrepreneurial ecosystem. Entrepreneurs in the regions affected by any of such crisis find it challenging to continue their entrepreneurial activities and that affects their morale and ability to withstand the difficult time. Entrepreneurial resilience is critical for safeguarding sustainable business actions during such crises. This study examines the impact of Psychological Capital (PsyCap)—including self-efficacy, hope, optimism, and resilience—on entrepreneurial resilience. The study analyzes the relationships among these PsyCap variables and their influence on entrepreneurs’ ability to navigate and overcome crises, using a Structural Equation Modelling (SEM) approach. The findings indicate that PsyCap acts as an important psychological resource, enabling and empowering entrepreneurs to recover from setbacks and continue their business ventures. By strengthening self-fulfillment, PsyCap boosts organizational resilience, nurturing an entrepreneurial spirit which is capable of withstanding in adverse conditions. The study underlines the importance of developing PsyCap qualities to augment resilience and sustainable entrepreneurship in times of crisis.