Access to Credit for Minority-owned Businesses

Abstract

Equal access to small business credit is a critical underpinning to equity in economic opportunity; however, it is difficult to regularly assess the fairness of credit provision. Prior research has focused on the Federal Reserve Board’s Survey of Small Business Finance, but last data from this source covered 2003. This article provides preliminary results on new credit access question added to the Census Bureau’s 2021 Annual Business Survey. We find that minority-owned businesses were just as likely to apply for credit in 2020, but Black-, Asian-, and Hispanic-owned businesses were less likely than white-owned businesses to report receiving all of the credit that they sought. Black-, Asian-, and Hispanic-owned firms also more frequently reported that the credit was intended for meeting operating expenses and that their ongoing viability was weaker heading into 2022.