The State of Minority- and Women- Owned ... - Cleveland.com

Statistical Disparities in Capital Markets
Census Bureau, for example, when owners were asked to identify the impact of various issues on
their firm’s profitability, 27.0 percent of African American-owned firms reporting an answer
indicated that lack of financial capital had a strong negative impact—compared to only 17.3
percent among nonminority male-owned firms. Hispanic-owned firms and other minority-owned
firms also reported higher percentages than nonminority male-owned firms—21.3 percent and
19.7 percent, respectively. Further, owners who had recently discontinued their business because
it was unsuccessful were asked in the CBO survey to identify the reasons why. African
American-owned firms, and to a lesser degree Hispanic-owned firms, other minority-owned
firms, and women-owned firms, were much more likely than nonminority male-owned firms to
report that the reason was due to lack of access to business or personal loans or credit. For
unsuccessful firms that were discontinued, 7.3 percent of firms owned by nonminority males
reported it was due to lack of access to business loans or credit compared to 15.5 percent for
firms owned by African Americans, 8.8 percent for Hispanics, 6.1 percent for Other minorities,
and 9.3 percent for women. Another 2.7 percent of nonminority males said it was due to lack of
personal loans or credit compared to 8.4 percent for firms owned by African Americans, 5.8
percent for Hispanics, 6.4 percent for Other minorities, and 3.3 percent for women. 268
A later study published by the U.S. Chamber of Commerce (2005) is also consistent with these
findings from the 1993 NSSBF and the 1992 CBO. 269 The Chamber of Commerce survey was
conducted in March and April 2005 and detailed the financing problems experienced by small
business owners, 95 percent of whom had less than 100 employees. Over 1,000 business owners
were interviewed. This survey showed that minority-owned businesses rely heavily on credit
cards to fund their businesses; often do not apply for credit, even though they need it, for fear of
being denied; and were especially likely to need working capital. In particular, as shown in Table
6.7, minority-owned firms report that availability of credit is their top problem. The biggest
difference in responses between minorities and nonminority men and women was availability of
credit: 19 percent of nonminority males report credit as their top problem compared with 54
percent for minority males. There was a 15 percentage point difference between minority women
and nonminority women. In no other category is there more than a 10 percentage point difference
for men or women.
268 Bureau of the Census (1997), Table 5a, p. 46, Table 1, p. 21.
269 Although the CBO is part of the Economic Census, it was not published in 1997. In 2002, the name was changed
to the Survey of Business Owners (SBO). Unfortunately, questions relating to the importance of access to
financial loans and credit to business success were not included in the 2002 survey.
NERA Economic Consulting 195