For immediate release: January 14, 2020
The report, based on findings from the 2018 Small Business Credit Survey, compares the experiences of minority-owned small businesses with White-owned small businesses.
The Federal Reserve Bank of Atlanta has issued the third in a series of reports that examine the results of the 2018 Small Business Credit Survey. The survey is conducted every year to examine the business performance, financing needs, and borrowing experiences of businesses with fewer than 500 employees. The 2019 Report on Minority–Owned Firms
focuses on firms in which Asian, Black, or Hispanic individuals own more than 50 percent of the business.
The report found that, although many minority-owned small businesses were profitable and optimistic, a significant majority were facing financial challenges and lagging in key performance indicators for profitability, revenue growth, and employee growth.
Key findings can be found in the executive summary of the 2019 Report on Minority–Owned Firms. Overall, the survey found:
- Smaller shares of Asian- (51 percent) and Black-owned businesses (46 percent) were profitable at the end of 2017 compared to White-owned firms (55 percent).
- Larger shares of White-owned firms reported revenue growth: 58 percent compared to 49 percent of Black-owned firms.
- Larger shares of White-owned firms reported growth in the number of employees: 37 percent compared to 31 percent of Black-owned firms.
- Minority-owned firms more frequently applied for, on average, higher-cost and less-transparent credit products.
- Minority-owned firms more frequently applied at online lenders for loans, lines of credit, or cash advances, and less frequently did so at small banks.
- Approval rates for loans or lines of credit and cash advances sought by minority-owned firms at small banks or online lenders were lower than those for White-owned firms (not controlling for other firm characteristics).
- Lender satisfaction lagged for Black- and Hispanic-owned firms.
For various key statistics on minority-owned nonemployer firms, please refer to the Small Business Credit Survey 2019 Report on Nonemployer Firms. Additional reports on the 2018 Small Business Credit Survey released in 2019 take an in–depth look into other specific types of small businesses, including both employer and nonemployer firms.
Contact: Mels de Zeeuw, Federal Reserve Bank of Atlanta, (470) 230-8520