Ann Marie Wiersch and Lucas Misera, 2022 Report on Firms Owned by People of Color (2022)
Summary
The Small Business Credit Survey 2022 Report on Firms Owned by People of Color, published by the Federal Reserve Banks, with a report team of Ann Marie Wiersch and Lucas Misera of the Federal Reserve Bank of Cleveland. The report draws on the 2021 Small Business Credit Survey, conducted with business and civic organizations across the United States. It compares the experiences of firms by the race and ethnicity of their owners, including Black, Asian, Hispanic and White owners, covering financing needs, credit risk and the outcomes of applications for financing. It notes that questions remain around the use of credit scores in financing decisions given structural limitations that disadvantage people of color and the firms they own.
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ISSN 2831-4034 | https://doi.org/10.55350/sbcs-20220629
SMALL BUSINESS
CREDIT SURVEY
2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR
F E DE R A L R E SE RV E BA N K S of
Atlanta • Boston • Chicago • Cleveland • Dallas • Kansas City • Minneapolis
NewSURVEY
SMALL BUSINESS CREDIT York |• 2022
Philadelphia • Richmond
REPORT ON FIRMS • St.
OWNED BY PEOPLE Louis • San Francisco
OF COLOR 1
ACKNOWLEDGMENTS
REPORT TEAM1
Ann Marie Wiersch, Federal Reserve Bank of Cleveland
Lucas Misera, Federal Reserve Bank of Cleveland
Please direct media inquiries to Chelcee Stearns, senior media relations liaison, at chelcee.a.stearns@clev.frb.org.
Please direct inquiries about research and data in this report to Lucas Misera, Policy Analyst, at lucas.misera@clev.frb.org.
The Small Business Credit Survey (SBCS) is made possible through collaboration with business and civic organizations in communities
across the United States. The Federal Reserve Banks thank the national, regional, and community partners who share valuable insights
about small business financing needs and work with us to promote and distribute the survey.2
Special thanks to colleagues within the Federal Reserve System, especially the community affairs officers, for their ongoing support of the
SBCS.3 The 2021 SBCS was the result of the collaborative effort and input of the following individuals in the Federal Reserve System:
NATIONAL SBCS TEAM OUTREACH LIAISONS
Emily Wavering Corcoran, Federal Reserve Bank of Cleveland Leilani Barnett, Federal Reserve Bank of San Francisco
Ayo Ellis, Federal Reserve Bank of Cleveland Alfred Breuer, Federal Reserve Bank of Dallas
Camilla Grigsby, Federal Reserve Bank of Cleveland Brian Clarke, Federal Reserve Bank of Boston
Grace Guynn, Federal Reserve Bank of Atlanta Emily Engel, Federal Reserve Bank of Chicago
Mary Hirt, Federal Reserve Bank of Atlanta Dell Gines, Federal Reserve Bank of Kansas City
Alexander Marré, Federal Reserve Bank of Cleveland Nicholas Haltom, Federal Reserve Bank of Richmond
Lucas Misera, Federal Reserve Bank of Cleveland Michou Kokodoko, Federal Reserve Bank of Minneapolis
Amber Sherman, Federal Reserve Bank of Cleveland Lisa Locke, Federal Reserve Bank of St. Louis
Maria Thompson, Federal Reserve Bank of Cleveland Drew Pack, Federal Reserve Bank of Cleveland
Ann Marie Wiersch, Federal Reserve Bank of Cleveland Emily Perlmeter, Federal Reserve Bank of Dallas
Alvaro Sánchez, Federal Reserve Bank of Philadelphia
SURVEY ADVISORS Janelle Williams, Federal Reserve Bank of Atlanta
Claire Kramer Mills, Federal Reserve Bank of New York
Mark Schweitzer, Federal Reserve Bank of Cleveland
The views expressed in this report are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or the Federal Reserve System.
Data used in this report may be subject to updates or changes.
1 The report team appreciates the thoughtful comments and guidance from the following Federal Reserve System colleagues: Mark Schweitzer and Merissa
Piazza from the Federal Reserve Bank of Cleveland and Barbara Lipman and Kim Wilson from the Board of Governors of the Federal Reserve System. Thank
you, Heather Ann and Ellen Seguin of the Federal Reserve Bank of Cleveland, for publication review and report design.
2 For a full list of community partners, please visit www.fedsmallbusiness.org.
3 Joseph Firschein, Board of Governors of the Federal Reserve System; Karen Leone de Nie, Federal Reserve Bank of Atlanta; Prabal Chakrabarti, Federal
Reserve Bank of Boston; Jane Dokko, Federal Reserve Bank of Chicago; Emily Garr Pacetti, Federal Reserve Bank of Cleveland; Tara Payne, Federal Reserve
Bank of Dallas; Teesha Miller, Federal Reserve Bank of Kansas City; Alene Tchourumoff, Federal Reserve Bank of Minneapolis; David Erickson, Federal Reserve
Bank of New York; Theresa Singleton, Federal Reserve Bank of Philadelphia; Carrie Cook, Federal Reserve Bank of Richmond; Daniel Davis, Federal Reserve
Bank of St. Louis; and Bina Shrimali, Federal Reserve Bank of San Francisco.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR i
TABLE OF CONTENTS
i EXECUTIVE SUMMARY 10 DEBT AND FINANCING
10 Debt Outstanding and Demand for Financing
iv NOTES AND DEFINITIONS
11 Demand for Financing, Prior 12 Months
1 PERFORMANCE AND CHALLENGES 12 Nonapplicants
1 Revenue and Employment Change, Prior 12 Months 13 Financing Needs and Outcomes
2 Revenue and Employment Change Since 2019 and 15 Financing Received
Effects of the Pandemic
3 Revenue and Employment Expectations, Next 16 FINANCING APPLICATIONS
12 Months 16 Loan/Line of Credit/Cash Advance Sources
4 Financial Condition and Challenges 17 Loan/Line of Credit/Cash Advance Approvals
5 Financial Challenges and Responses, Prior 12 Months 18 Loan/Line of Credit/Cash Advance Approvals
By Source
6 PANDEMIC-RELATED FINANCIAL ASSISTANCE
19 Satisfaction with Lenders
6 Funding Sought and Received
7 Funding Applications 20 DEMOGRAPHICS
8 PPP Applications and Outcomes
9 Nonapplicants
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR i
EXECUTIVE SUMMARY
INTRODUCTION SURVEY FINDINGS n The share of firms reporting financial
challenges increased across all employer
The Small Business Credit Survey (SBCS), The 2021 SBCS, which was fielded during firms between 2020 and 2021 regardless
a collaboration of all 12 Federal Reserve September through November of 2021, of race or ethnicity, but firms owned by
Banks, is a survey of small businesses yielded 10,914 responses from small people of color remained more likely to
across the nation that includes questions employer firms in all 50 states and the report a financial challenge. The most
about business performance, the financial District of Columbia. This report shows common financial challenge among firms
and operational challenges that businesses results for employer firms—businesses with owned by people of color was covering
face, and financing outcomes. Importantly, 1 to 499 employees other than the owners— business expenses, including wages, rent,
the SBCS also collects key demographic by four race/ethnicity categories: Asian or inventory costs, and debt payments.
data on business owners and their Pacific Islander, Black or African American,
businesses’ characteristics, including the Hispanic or Latino, and white.1 Findings for n Firms owned by people of color were
race and ethnicity of a business’s owners. Native American-owned firms are omitted around twice as likely as white-owned
This publication highlights key data from from this report because sample sizes firms to describe their financial condition
the 2021 SBCS across Asian-, Black-, are too small to make precise estimates as “poor.” Thirty-nine percent of Asian-
Hispanic-, and white-owned businesses. for most measures.2 Because the SBCS owned firms reported that their business
findings represent the experiences of those was in poor financial condition, as did
This report is an important follow-up to the firms that were operating at the time of the 36% of Black-owned firms and 28% of
Small Business Credit Survey 2021 Report survey, the data do not reflect the collective Hispanic-owned firms. By comparison,
on Firms Owned by People of Color, which experiences of all small firms throughout 17% of white-owned firms reported that
found that businesses owned by people the pandemic; firms that closed prior to the they were in poor financial condition.
of color often face more financial and fielding of the survey are not included in the
operational challenges than their white- sample for this report.
owned counterparts but often were less Overall, small businesses were less likely
successful at obtaining the funding needed to apply for pandemic-related financial
to weather the effects of the pandemic. As While revenues and employment improved assistance in 2021 than in 2020. In
this publication shows, those disparities for some businesses, most firms— particular, fewer firms reported seeking
persisted a year later. particularly firms owned by people of color— loans through the Paycheck Protection
had not yet recovered from the effects of Program (PPP), from which firms owned
Despite some improvement in revenue and the pandemic. In fact, the share of firms by people of color were less successful at
employment performance among employer reporting financial challenges increased obtaining funds than white-owned firms.
firms between the 2020 and 2021 surveys, between the 2020 and 2021 surveys.
firms owned by people of color were less
n In 2021, firms owned by people of color
likely than white-owned firms to report n Firms owned by people of color were were more likely to seek pandemic-
that either metric had reached 2019 levels. more likely than white-owned firms related financial assistance than white-
And—as the SBCS has consistently found to report that revenues had not yet owned firms. Firms owned by people of
over time—firms owned by people of color recovered from the effects of the color that did apply were most likely to
disproportionately reported difficulties COVID-19 pandemic. Seventy-nine seek an Economic Injury Disaster Loan
accessing the funding needed to overcome percent of Asian-owned firms reported (EIDL), while white-owned firms were as
their challenging financial conditions. that, at the time of the survey, their likely to apply for an EIDL loan as they
Whether seeking pandemic-related funding revenues had not yet reached 2019 levels. were a PPP loan.
such as Paycheck Protection Program (PPP) By comparison, 72% of Black-owned
loans or more traditional loans or lines of firms, 67% of Hispanic-owned firms,
credit from lenders, firms owned by people of and 59% of white-owned firms said their
color continue to report lower approval rates revenues remained lower than in 2019.
than their white-owned counterparts.
1 The SBCS uses census-defined categories of race and ethnicity. Throughout this report, we use simplified, mutually exclusive race/ethnicity labels. For
example, a label of “white” refers to “non-Hispanic white” and a label of “Hispanic” refers to all firms owned by individuals of Hispanic ethnicity, regardless of
their race.
2 When sample sizes permit, Native American-owned firms are included in the Appendix.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR i
EXECUTIVE SUMMARY
(Continued)
n Among firms that did not seek pandemic- n Applicant firms owned by people of company. The gap in the share of fully
related financial assistance, firms owned color were half as likely as white-owned approved applicants was narrower—but
by people of color were more likely than applicant firms to report that they still present—at large banks (35% of
white-owned firms to report not applying received all the traditional financing white-owned applicant firms vs. 20%
despite needing the funding. Most they sought in the 12 months prior to of applicant firms owned by people of
commonly, these firms reported that the survey. Specifically, 35% of white- color) and at online lenders (31% of
they did not think they would qualify for owned applicant firms were fully funded, white-owned applicant firms vs. 24% of
funding programs. Black-owned firms compared to 19% of Hispanic-owned applicant firms owned by people of color).
were most likely to expect their business firms, 16% of Black-owned firms, and 15%
would not qualify (67%, compared to 53%, of Asian-owned firms. Even among firms
ABOUT THE SURVEY
50%, and 43% of Asian-, Hispanic-, and with good credit scores, firms owned
white-owned firms, respectively). by people of color were less likely than The SBCS is an annual survey of firms with
white-owned firms to have received all of fewer than 500 employees. These types
n Firms were less likely to apply for PPP the financing for which they applied. of firms represent 99.7% of all employer
loans in 2021 than in 2020, but when they
establishments in the United States.3
did apply, firms owned by people of color
Applicant firms were more likely to seek Respondents are asked to report information
were less likely than white-owned firms
loans, lines of credit, and cash advances about their business performance,
to report receiving the full amount of
at large or small banks than at nonbank financing needs and choices, and borrowing
funding for which they applied. While 70%
lenders. However, at both bank and experiences. Responses to the SBCS provide
of white-owned firms in 2021 received all
nonbank lenders, firms owned by people insights on the dynamics behind lending
of the PPP funding they applied for, the
of color were less likely than white-owned trends and shed light on various segments of
same was true for just 55% Asian-owned
firms to be approved for financing. the small business population.
firms, 44% of Hispanic-owned firms, and
31% of Black-owned firms.
n Regardless of race and ethnicity of
METHODOLOGY
firm ownership, employer firms were
Firms owned by people of color were more more likely to apply at large banks The SBCS uses a convenience sample
likely to apply for traditional financing than at other lenders for loans, lines of of establishments. Businesses are
than white-owned firms, but they were less credit, and cash advances. Asian- and contacted by email through a diverse set of
likely to receive the funding sought. white-owned firms (38% and 37%, organizations that serve the small business
respectively) were more likely than community.4 Prior SBCS participants are
n Firms owned by people of color were Black- and Hispanic-owned firms also contacted directly by the Federal
more likely than white-owned firms (28% and 24%, respectively) to apply Reserve Banks. The survey instrument is
to have applied for financing in the at small banks, which had the highest an online questionnaire that typically takes
12 months prior to the survey. Compared rate of satisfaction among applicants. 6 to 12 minutes to complete, depending
to white-owned businesses, firms Black- and Hispanic-owned firms (33% upon the intensity of a firm’s search for
owned by people of color sought smaller and 29%, respectively) were more likely financing. The questionnaire uses question
amounts of financing. than white- and Asian-owned firms branching and flows based on responses to
(23% and 20%, respectively) to apply at survey questions. For example, financing
n Among firms that did not apply for
online lenders, which had the lowest net applicants receive a different line of
financing—that is, nonapplicant
satisfaction. questioning than nonapplicants. Therefore,
firms—50% of white-owned said the
primary reason was that they did not the number of observations for each
n Regardless of the type of lender they
need the funding. Comparatively, just question varies by how many firms receive
applied to, firms owned by people of
13% of Black-owned nonapplicants and complete a particular question.
color were less likely than white-owned
reported that they did not apply because firms to be approved for the full amount A sample for the SBCS is not selected
they had sufficient funding, as did 27% of funds they sought. Firms owned by randomly; thus, the SBCS may be subject
and 26% of Asian- and Hispanic-owned people of color were half as likely as to biases not present with surveys that do
firms, respectively. Compared to other white-owned firms to be fully approved sample firms randomly. For example, there
firms, Black-owned nonapplicants were for a loan or line of credit at a small are likely small employer firms not on our
more discouraged about their chances of bank and almost a third as likely to be contact lists, a situation which could lead to
being approved. fully approved at a nonbank finance noncoverage bias. To control for potential
3 US Census Bureau, County Business Patterns, 2019.
4 For more information on partnerships, please visit www.fedsmallbusiness.org/partnership.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR ii
EXECUTIVE SUMMARY
(Continued)
biases, the sample data are weighted so the
weighted distribution of firms in the SBCS
matches the distribution of the small-firm
(1 to 499 employees) population in the
United States by number of employees,
age, industry, geographic location (census
division and urban or rural location),
gender of owner(s), and race or ethnicity
of owner(s). The weighting methodology
was developed in collaboration with the
National Opinion Research Center (NORC)
at the University of Chicago. The data used
to construct the weights originate from the
US Census Bureau. For more information
on the report and weighting methodology,
please refer to the Small Business Credit
Survey 2022 Report on Employer Firms
Methodology section.
Whenever this report refers to “Asian,”
“Black,” “Hispanic,” or “white,” the report
and the data refer to the race and ethnicity
of the majority of the firms’ ownership:
non-Hispanic Asian-owned, non-Hispanic
Black-owned, Hispanic- or Latino-owned,
or non-Hispanic white-owned. When this
report refers to "firms of color" or "firms
owned by people of color," the data refer to
firms for which more than 50% of a firm's
ownership is Asian, Black, or Hispanic.
When specified, firms owned by people
of color will also include majority Native
American ownership. Consistent with the
approach taken by the US Census Bureau,
in cases where a firm is owned equally
by owners who are white and owners
who are from a racial or ethnic minority
group, or in cases in which at least half
of the firm is owned by another entity (for
example, shareholders or a trust), that firm
is classified as “white.” When observation
counts are too low to provide reliable
estimates for specific race or ethnicity
categories, results are displayed only for
categories with sufficiently high counts or
for firms of color collectively.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR iii
NOTES AND DEFINITIONS
TIME REFERENCES
Survey questions in the SBCS ask respondents to reference specific time periods. Most questions ask about respondents’ experiences
in the 12 months prior to the time of their response. In some cases, questions ask about conditions at the time of their response, or how
conditions at that point in time compare to a prior reference period. Finally, some questions ask about respondents’ expectations in the
12 months following the time of their response. The time periods referenced in the survey are defined as follows:
Prior 12 Months. The 12 months prior to the fielding of the survey. For the 2021 SBCS, this is approximately September–November 2020
through September–November 2021.
At Time of Survey. September through November 2021.
Next 12 Months. The 12 months following the fielding of the survey. For the 2021 SBCS, this is approximately September–November 2021
through September–November 2022.
FINANCIAL SERVICES PROVIDERS AND LENDERS
Questions in the SBCS ask respondents about their use of and experiences with lenders and other financial services providers. Because
respondents may not have a uniform understanding of the terms used in the SBCS, the questionnaire provides examples and explanatory
information about the response options. Examples vary between questions to convey the most relevant services and providers.1 The
financial services providers and lenders referenced in the survey are defined as follows:
Large bank, small bank. Large banks are defined as those with at least $10B in total deposits; small banks are those with less than $10B
in total deposits. For application questions, respondents are shown a list of large banks operating in their state to assist them with proper
classification of their institution.
Finance company. Finance companies are nonbanks that provide loans, leases, and other financial services. Examples provided to
respondents vary by question but include mortgage companies, equipment dealers, auto finance companies, investment funds, and
insurance companies.
Online lender/fintech company. Online lenders/fintech companies are nonbanks that operate online. Examples provided to respondents
vary by question but include OnDeck, Kabbage, CAN Capital, Paypal, and Square.
Credit union. Credit unions are nonprofit cooperatives where members can borrow money at competitive rates from pooled deposits.
Community development financial institution (CDFI). CDFIs are financial institutions that provide credit and financial services to
underserved markets and populations. CDFIs are certified by the CDFI Fund at the US Department of the Treasury.
Financial services company. Financial services companies are nonbank providers of business financial services. Examples include
companies that provide payroll processing, merchant services, and accounting services.
Alternative financial source. Examples of alternative financial sources provided to respondents include payday lenders, check cashing
services, pawn shops, and money order/transmission services.
CREDIT RISK
Credit risk is determined by the self-reported business credit score or personal credit score, depending on which is used to obtain
financing for the business. If a firm uses both, the weaker score is used. “Low credit risk” is an 80–100 business credit score or 720+
personal credit score. “Medium credit risk” is a 50–79 business credit score or a 620–719 personal credit score. “High credit risk” is a
1–49 business credit score or a <620 personal credit score.
1 See SBCS questionnaire for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR iv
PERFORMANCE AND CHALLENGES
Revenue and Employment Change, Prior 12 Months
While revenue performance improved year over year across all employer
firms, firms owned by people of color were more likely than white-owned
firms to report declines in revenue and employment in the prior 12 months.
EMPLOYER FIRM PERFORMANCE1 (% of employer firms)
sIncreased sNo change sDecreased
REVENUE CHANGE, Prior 12 Months EMPLOYMENT CHANGE, Prior 12 Months
Black 21% 15% 64% Black 19% 39% 42%
N=1,719 N=1,652
Asian 24% 13% 62% Asian 15% 44% 42%
N=971 N=954
Hispanic 27% 15% 58% Hispanic 21% 41% 39%
N=1,093 N=1,052
White 41% 14% 45% White 25% 43% 31%
N=6,705 N=6,786
EMPLOYER FIRM REVENUE GROWTH INDEX, Prior 12 Months1,2 (% of employer firms)
ssBlack N=455–1,719
ssAsian N=188–971
36% ssHispanic N=403–1,093
33% 34% 35%
27% 29% 27% 26% ssWhite N=3,870–7,873
23% 24%
20% 19%
2020 Survey 2021 Survey
2017 Survey 2018 Survey 2019 Survey -5%
-31%
-38%
-43%
-60%
-69%
-75%
-85%
1 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS. Percentages may not sum to 100 because of rounding.
2 The index is the share reporting an increase minus the share reporting a decrease. Number of observations varies by year.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 1
PERFORMANCE AND CHALLENGES
Revenue and Employment Change Since 2019 and Effects of the Pandemic
Overall, the pandemic has had more negative effects on firms owned by
people of color than on white-owned firms, including greater reductions to
their revenue and employment.
EMPLOYER FIRM REVENUE AND EMPLOYMENT CHANGE SINCE 20191,2 (% of employer firms)
sIncreased sNo change sDecreased
REVENUE CHANGE EMPLOYMENT CHANGE
Asian 13% 7% 79% Asian 13% 35% 52%
N=766 N=777
Black 17% 11% 72% Black 18%
N=1,335 N=1,321 31% 50%
Hispanic 23% 11% 67% Hispanic 18%
N=827 N=818 33% 49%
White White
N=4,194 30% 10% 59% N=4,267 22% 37% 41%
EFFECTS OF THE PANDEMIC ON BUSINESS, At Time of Survey2 (% of employer firms)
Asian 48% 38% 9% 4% 2%
N=980
Black 46% 40% 7% 5% 2%
N=1,772
Hispanic 42% 41% 11% 4% 2%
N=1,118
White 30% 45% 17% 6% 1%
N=6,901
sLarge negative effect Moderate negative effect sLittle to no effect sModerate positive effect sLarge positive effect
1 If their business was established in 2019 or earlier, respondents were asked to compare their revenue and employment levels at the time of the survey to the
same time in 2019.
2 Percentages may not sum to 100 because of rounding. See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 2
PERFORMANCE AND CHALLENGES
Revenue and Employment Expectations, Next 12 Months
Overall, firms were more optimistic about future revenue and employment
growth than they were in 2020. In 2021, Asian-owned firms were less likely
than other firms to expect growth in the next 12 months.
EMPLOYER FIRM EXPECTATIONS, 2021 Survey1,2 (% of employer firms)
sWill increase sNo change sWill decrease
EXPECTED REVENUE CHANGE, EXPECTED EMPLOYMENT CHANGE,
Next 12 Months Next 12 Months
Black 65% 19% 16% Black 50% 39% 11%
N=1,731 N=1,674
Hispanic 63% 24% 13% Hispanic 45% 43% 12%
N=1,088 N=1,059
White 59% 24% 16% White 42% 49% 10%
N=6,775 N=6,811
Asian Asian
N=970 48% 29% 23% N=961 33% 53% 14%
EMPLOYER FIRM REVENUE EXPECTATIONS INDEX, Next 12 Months2,3 (% of employer firms)
sBlack N=488–1,731
Hispanic N=408–1,088
sAsian N=192–970
75% 76% 74%
70% 69% sWhite N=3,852–7,892
64%
61% 64% 63%
59%
53%
50% 50%
47%
43%
24%
5% 5%
12%
-39%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
1 Percentages may not sum to 100 because of rounding.
2 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
3 The index is the share reporting expected growth minus the share reporting expected declines. Number of observations varies by year.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 3
PERFORMANCE AND CHALLENGES
Financial Condition and Challenges
Asian- and Black-owned firms were more than twice as likely as white-owned
firms to be in poor financial condition at the time of the survey.
FINANCIAL CONDITION, At Time of Survey1,2 (% of employer firms)
Asian
N=982
39% 42% 15% 3% 1%
Black
N=1,775
36% 40% 19% 4% 1%
Hispanic
N=1,118
28% 45% 19% 4% 3%
White
N=6,900
17% 38% 27% 12% 6%
sPoor Fair sGood sVery good sExcellent
SHARE OF FIRMS WITH FINANCIAL CHALLENGES, Prior 12 Months2 (% of employer firms)
95%
Asian N=196–980
92% 94%
Black N=465–1,768
89% 92% Hispanic N=420–1,116
White N=3,952–6,855
85% 86%
83% 83%
78% 78% 79%
71%
69%
70%
66% 69%
62% 62% 65%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
1 Self-reported financial condition at time of survey. Percentages may not sum to 100 because of rounding.
2 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS. Number of observations varies by year.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 4
PERFORMANCE AND CHALLENGES
Financial Challenges and Responses, Prior 12 Months
Asian-owned firms were more likely than other firms to report weak sales as
a financial challenge; Black-owned firms were more likely than others to say
credit availability was a concern.
TYPES OF FINANCIAL CHALLENGES, Prior 12 Months1 (% of employer firms)
sAsian N=980
Black N=1,768
77% 76%
72% sHispanic N=1,116
70%
sWhite N=6,855
59% 60% 60% 60%
56% 55% 58% 55%
50%
37%
28% 27%
Paying operating expenses Weak sales Uneven cash flow Credit availability
ACTIONS TAKEN IN RESPONSE TO FINANCIAL CHALLENGES, Prior 12 Months1,2
(% of employer firms reporting financial challenges) sAsian N=927
Black N=1,662
sHispanic N=1,028
76%
72% 73% sWhite N=5,801
64%
59% 60%
56% 58%
53% 54%
50% 52% 52%
47%
45% 47%
Obtained funds that do Used personal funds Obtained funds that Used cash reserves
not have to be repaid must be repaid
(for example, grants, PPP) (for example, loans)
1 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS. Respondents could select multiple options. Select response
options shown.
2 Respondents were instructed to include Paycheck Protection Program (PPP) with funds that do not have to be repaid only if they received or expected loan
forgiveness.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 5
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Funding Sought and Received
In 2021, firms continued to rely on pandemic-related financial assistance,
including the Paycheck Protection Program (PPP), Economic Injury Disaster
Loans (EIDL), and other federal, state, and local funding programs. With the
exception of Asian-owned firms—which were more likely than other firms to
experience revenue declines through the pandemic—the share of firms that
sought financial assistance in 2021 declined considerably from 2020.
SHARE OF FIRMS THAT SOUGHT PANDEMIC-RELATED FINANCIAL ASSISTANCE, Prior 12 Months1
(% of employer firms)
Asian 2020 Survey
92% 93%
N=659–970 2021 Survey
Black
N=1,162–1,758
83% 89%
Hispanic
N=834–1,103
77% 86%
White
75% 91%
N=6,804–6,798
The share of firms that received some form of financial assistance declined
for all firms. Hispanic- and Black-owned firms were less likely than other firms
to have received assistance in the prior 12 months.
SHARE OF FIRMS THAT RECEIVED PANDEMIC-RELATED FINANCIAL ASSISTANCE, Prior 12 Months1
(% of employer firms)
2020 Survey
Asian
80% 90% 2021 Survey
N=647–945
Black
N=1,126–1,712
57% 72%
Hispanic
N=826–1,050
55% 78%
White
66% 87%
N=6,652–6,750
1 "Financial assistance" includes all forms of pandemic-related financial assistance (for example, PPP, EIDL, state/local loan and grant programs). See Notes and
Definitions on page iv for descriptions of the time periods referenced in the SBCS. Number of observations varies by year; number of observations from 2020
survey shown first.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 6
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Funding Applications
EIDL and PPP loans were the most commonly sought forms of pandemic-
related financial assistance. Firms owned by people of color were more likely
than white-owned firms to seek EIDL loans.
TYPES OF FINANCIAL ASSISTANCE SOUGHT, Prior 12 Months1
(% of employer firms that sought assistance)
62% sAsian N=970
57% Black N=1,758
EIDL loan
54% sHispanic N=1,103
45%
sWhite N=6,798
59%
Paycheck 49%
Protection Program loan 38%
46%
46%
Grant from state/local 25%
government fund 26%
32%
44%
EIDL advance 43%
29%
29%
11%
Restaurant Revitalization 3%
Fund grant 6%
5%
7%
Loan from state/local 5%
government fund 7%
5%
8%
Did not seek 17%
financial assistance 23%
25%
1 The Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL), and Restaurant Revitalization Fund are administered by the US Small Business
Administration. "Other" programs, not shown, include Shuttered Venue Operator grants, grants from nonprofits or foundations, and other corporate-sponsored
funding programs. While PPP loans were available only until May of 2021, applicants could seek EIDL funds—including expansions of outstanding EIDL loans—until
the end of 2021. Respondents could select multiple options. See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 7
PANDEMIC-RELATED FINANCIAL ASSISTANCE
PPP Applications and Outcomes
Since the onset of the pandemic in 2020, Asian-owned firms were more likely
than other firms to have applied for PPP loans. In 2021, white-owned applicant
firms were most likely to have been approved for all the PPP funding they sought.
PPP APPLICATIONS, 2020 and 20211 (% of employer firms)
81% Applied in 2020
79%
Applied in 2021
Did not apply for PPP
62%
59% 57%
47% 49%
38%
26% 26%
16%
13%
Asian White Hispanic Black
N=976 N=6,873 N=1,105 N=1,757
PPP FUNDING RECEIVED, AS A SHARE OF AMOUNT SOUGHT BY APPLICANTS, 2021 Survey2 (% of PPP applicants)
White
N=3,569
70% 14% 7% 9%
Asian
N=619
55% 21% 14% 11%
Hispanic
N=492 44% 12% 21% 24%
Black
N=842 31% 11% 24% 34%
All (100%) Most (51%–99%) Some (1%–50%) None (0%)
1 The shares of firms that applied for PPP in 2020 were drawn from the 2021 survey. Previous findings on PPP application rates from the 2020 survey are not
directly comparable because of differences in the samples for the two survey years.
2 Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 8
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Nonapplicants
Firms owned by people of color were more likely than white-owned firms to
say they did not apply for financial assistance because they did not expect the
business would qualify or because they could not find a suitable program.
REASONS FIRMS DID NOT SEEK FINANCIAL ASSISTANCE, Prior 12 Months1
(% of employer firms that did not apply for assistance)
67%
Did not think 53%
Black N=203
business would qualify
50% sAsian N=62
43% sHispanic N=159
sWhite N=1,371
29%
25%
Could not find a program to Firms owned by people of color
fit business needs 26% —particularly Black-owned
firms—were more likely than
17%
white-owned firms to expect
their business would not
qualify. These firms are more
26% often newer firms and may
12% not have met the criteria for
Programs too confusing programs like PPP.
or time consuming 26%
19%
8%
4%
Other reasons
8%
7%
11%
28%
Business did not need funding
18%
38%
1 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS. Respondents could select multiple options.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 9
DEBT AND FINANCING
Debt Outstanding and Demand for Financing
Hispanic-owned firms were more likely than other firms to have debt; however,
more than a third owed less than $50,000.
AMOUNT OF DEBT, At Time of Survey1,2 (% of employer firms)
Black
N=1,730 32% 39% 12% 10% 7%
Asian
N=938 26% 22% 13% 21% 19%
White
N=6,788 26% 20% 12% 17% 24%
Hispanic
N=1,091 22% 37% 15% 15% 11%
No outstanding debt ≤$50K $50K–$100K $100K–$250K >$250K
Firms owned by people of color were more likely than white-owned firms
to have applied for traditional financing—which excludes pandemic-related
assistance programs—in the prior 12 months.
SHARE THAT APPLIED FOR FINANCING, Prior 12 Months2,3 (% of employer firms)
42% 42% 38% 33%
Black Hispanic Asian White
N=1,721 N=1,057 N=931 N=6,742
1 Respondents were instructed to exclude loans they expected would be forgiven from their outstanding debt (for example, PPP loans). Categories have been
simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K, $250,001–$1M, and >$1M. Percentages may not sum
to 100 because of rounding.
2 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
3 Excludes pandemic-related financial assistance applications. Respondents were asked first about their applications for pandemic-related financial assistance;
they then were asked to exclude these financial assistance applications from subsequent responses on the applications for financing.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 10
DEBT AND FINANCING
Demand for Financing, Prior 12 Months
Overall, firms most often sought financing to cover their operating expenses.
Asian-owned firms were less likely than other firms to have sought funds for
expansion.
REASONS FOR APPLYING FOR FINANCING, Prior 12 Months1,2 (% of applicants)
78% Black N=763
76%
Asian N=349
71%
Hispanic N=441
59% White N=2,097
45% 43% 42%
35% 35%
32%
28% 30% 29% 29%
26% 25%
Meet operating Expand business, pursue Refinance or pay down debt Replace capital assets
expenses new opportunities, or acquire or make repairs
business assets
Firms owned by people of color—especially Black-owned firms—sought
smaller amounts of financing than white-owned firms.
TOTAL AMOUNT OF FINANCING SOUGHT, Prior 12 Months2,3 (% of applicants)
Black
N=760
29% 47% 23%
Hispanic
N=433
19% 45% 36%
Asian
N=345
19% 34% 46%
White
N=2,081
14% 34% 52%
≤$25K $25K–$100K >$100K
1 Respondents could select multiple options. Response option "other" not shown. See Appendix for more details.
2 See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
3 Categories have been condensed and simplified for readability. Actual response options are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K,
$250,001–$1M, >$1M. Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 11
DEBT AND FINANCING
Nonapplicants
Among nonapplicants—firms that did not apply for financing in the prior
12 months—more than half of firms needed funding but opted not to apply.
Their reasons varied by the owners' race and ethnicity.
TOP REASONS FIRMS DID NOT APPLY FOR FINANCING 1 (% of nonapplicants)
50% Had sufficient financing
Debt averse
26%
Discouraged
White 12%
N=4,477
Application process
5% too difficult or confusing
4% Credit cost too high
3% Other
27%
White-owned firms were
34%
more likely than other
Asian 22% firms to say they didn’t
N=549 9% apply because they had
sufficient financing.
4%
4%
26%
25% Asian-owned firms
24% that did not apply for
Hispanic
N=591
financing most often
12% said they were debt
7% averse.
6%
13%
Compared to other
26% firms, Black-owned
nonapplicants were
Black 40%
more discouraged
N=856
13% about their chances
5% of being approved.
3%
1 Respondents could select multiple options. Discouraged firms are those that did not apply for financing because they believed they would be turned down.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 12
DEBT AND FINANCING
Financing Needs and Outcomes
FUNDING NEEDS AND OUTCOMES
To gauge funding success and shortfalls, we combine applicants’ financing outcomes and nonapplicants’ reasons for not applying.
Firms that had their funding needs met include
1) Applicant firms that received the full amount of financing sought
2) Nonapplicant firms that did not apply for financing because they already had sufficient financing
Firms that did not have their funding needs met include
1) Applicant firms that did not obtain the full amount of financing sought
2) Nonapplicant firms that needed funds but chose not to apply
When applicant firms did not obtain the full amount of financing sought, we consider them to have a funding shortfall. When
nonapplicant firms needed funds but chose not to apply, we consider them to have unmet funding needs.
Close to one in three firms owned by people of color reported a financing shortfall,
compared to just one in five white-owned firms.
White-owned firms were twice as likely as Asian- and Hispanic-owned firms and
three times as likely as Black-owned firms to have their financing needs met.
Half of Black-owned firms reported unmet funding needs, compared to 45% of Asian-
owned firms, 44% of Hispanic-owned firms, and 34% of white-owned businesses.
See chart on next page
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 13
DEBT AND FINANCING
Financing Needs and Outcomes (Continued)
FUNDING NEEDS AND OUTCOMES, Prior 12 Months1 (% of employer firms)
Had a financial shortfall Financing needs met Have unmet funding needs
12% Received none
38% 13% Received some
8% Received most
33%
Applied for financing
Asian 6% Received all
N=881 22%
16% Had sufficient financing
62% 21% Debt averse
Did not apply for financing 13% Discouraged 45%
11% Other
20% Received none
42% 11% Received some
5% Received most
36%
Applied for financing
Black 7% Received all
N=1,607 14%
7% Had sufficient financing
58% 15% Debt averse
Did not apply for financing 23% Discouraged 50%
12% Other
18% Received none
42% 11% Received some
5% Received most
33%
Applied for financing
Hispanic 8% Received all
N=1,011
23%
15% Had sufficient financing
58% 15% Debt averse
Did not apply for financing 14% Discouraged 44%
15% Other
11% Received none
33% 6% Received some
4% Received most
21%
Applied for financing
11% Received all
White 45%
N=6,512 34% Had sufficient financing
67% 17% Debt averse
Did not apply for financing 8% Discouraged 34%
8% Other
1 Excludes pandemic-related financial assistance applications. See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
Discouraged firms are those that did not apply for financing because they believed they would be turned down. Response option “other” includes “credit cost was
too high,” “application process was too difficult or confusing,” and “other.” Percentages may not sum to combined shares shown because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 14
DEBT AND FINANCING
Financing Received
Applicant firms owned by people of color were about half as likely as white-
owned applicant firms to receive all of the financing they sought.
TOTAL FINANCING RECEIVED1 (% of applicants)
White 35% 13% 18% 34%
N=2,037
Hispanic 19% 11% 26% 44%
N=420
Black
N=752
16% 11% 26% 47%
Asian
N=335
15% 20% 33% 32%
All Most (51%–99%) Some (1%–50%) None
Among low-credit-risk applicants, firms owned by people of color were less
likely than white-owned firms to receive all the financing they sought.
TOTAL FINANCING RECEIVED BY CREDIT RISK OF FIRM 1,2 (% of applicants)
All Most/Some None
LOW CREDIT RISK MEDIUM/HIGH CREDIT RISK
White White
N=1,027
43% 31% 27% N=565 17% 35% 48%
Black Black
N=167
27% 32% 41% N=406
13% 37% 51%
Hispanic Hispanic
N=143 24% 35% 41% N=188 16% 37% 47%
Asian Asian
N=163
19% 53% 28% N=83
10% 55% 35%
1 Percentages may not sum to 100 because of rounding. Excludes pandemic-related financial assistance applications.
2 See Notes and Definitions on page iv for details on credit risk definitions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 15
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Sources
Across firm categories, applicants were most likely to apply for financing at
large banks.
CREDIT SOURCES APPLIED TO1 (% of loan, line of credit, and cash advance applicants)
Hispanic N=284
50%
Asian N=204
48%
Large bank Black N=528
45%
White N=1,545
42%
24%
38% Asian- and white-owned
Small bank firms were more likely
28%
to apply at small banks
37% than at nonbank lenders.
29%
20%
Online lender Hispanic-owned firms
33% were more likely than
22% other firms to apply at
a nonbank lender.
28%
20%
Finance company
20%
16%
12%
Black-owned firms were
7% more likely than other
Credit union firms to apply at online
15%
lenders and credit
8%
unions.
2%
6%
CDFI
9%
3%
1 See Notes and Definitions on page iv for details on lender descriptions used in the SBCS. Respondents could select multiple options. Excludes pandemic-related
financial assistance applications. Response option “other” not shown in chart. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 16
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approvals
Since the onset of the pandemic, approval rates on loan, line of credit, and cash
advance applications have declined across firm categories. Firms owned by
people of color remain less likely than white-owned firms to be approved.
SHARE OF LOAN, LINE OF CREDIT, AND CASH ADVANCE APPLICANTS THAT WERE AT LEAST PARTIALLY
APPROVED, By Survey Year1,2 (% of loan, line of credit, and cash advance applicants)
84% 84%
White N=1,407–2,129
81%
79% Asian N=61–187
77% 78%
80% Black N=192–490
73% Hispanic N=150–273
74% 70%
68%
66%
67% 64%
60%
59%
57%
53%
48%
49%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
OUTCOMES OF LOAN, LINE OF CREDIT, AND CASH ADVANCE APPLICATIONS, 2021 Survey2,3
(% of loan, line of credit, and cash advance applicants)
White 52% 18% 30%
N=1,459
Asian
N=187
35% 25% 40%
Hispanic
N=273
28% 21% 51%
Black
N=490
27% 27% 47%
Fully approved Partially approved Denied
1 Number of observations varies by year.
2 Excludes pandemic-related financial assistance applications. See Notes and Definitions on page iv for descriptions of the time periods referenced in the SBCS.
3 Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 17
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approvals By Source
Firms owned by people of color were less likely than white-owned firms to
be approved for loans, lines of credit, and cash advances across banks and
non-bank lenders. White-owned firms were twice as likely to be fully approved
at small banks and more than twice as likely at finance companies.
OUTCOMES OF LOAN, LINE OF CREDIT, AND CASH ADVANCE APPLICATIONS, By Source 1
(% of loan, line of credit, and cash advance applicants)
Fully approved Partially approved Denied
Large bank
White 35% 14% 51%
N=606
Firms
of color 20% 19% 61%
N=471
Small bank
White 50% 20% 30%
N=573
Firms
of color 26% 19% 55%
N=293
Online lender
White
N=267
31% 23% 46%
Firms
of color 24% 17% 59%
N=267
Finance company
White
N=225 56% 20% 24%
Firms
of color 22% 26% 52%
N=172
1 For this chart, "firms of color" includes Native American-owned firms, in addition to Black-, Asian-, and Hispanic-owned firms. Credit union and CDFI outcomes
not included because of insufficient sample size. See Notes and Definitions on page iv for details on lender descriptions used in the SBCS. Excludes pandemic-
related financial assistance applications. Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 18
FINANCING APPLICATIONS
Satisfaction with Lenders
Among successful applicants, firms owned by people of color were
generally less satisfied with their experiences with their lenders than were
white-owned firms. Firms were most satisfied with small banks and least
satisfied with online lenders.
NET SATISFACTION WITH LENDERS, By Source1
(% of loan, line of credit, and cash advance applicants approved for at least some financing at source)
White
N=148–412
Firms of color
N=91–189
70%
Small bank
63%
57%
Large bank
33%
31%
Finance company
7%
5%
Online lender
6%
1 For this chart, "firms of color" includes Native American-owned firms, in addition to Black-, Asian-, and Hispanic-owned firms. Net satisfaction is the share of
firms satisfied minus the share of firms dissatisfied. Credit union and CDFI net satisfaction not included because of insufficient sample size. See Notes and
Definitions on page iv for details on lender descriptions used in the SBCS. Excludes pandemic-related financial assistance applications.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 19
DEMOGRAPHICS
REVENUE SIZE OF FIRM1 NUMBER OF EMPLOYEES1
(% of employer firms) (% of employer firms)
3%, 2% 2% 2%
7% 5% 6% 6%
14% 17% 10%
29% 21%
24% 26%
30%
39% 32%
53%
53%
75%
63% 69% 65%
47% 52%
30%
19%
Black Hispanic Asian White Black Hispanic Asian White
N=1,672 N=1,054 N=949 N=6,713 N=1,775 N=1,119 N=983 N=6,904
ss>$1M ss50–499 employees
ss$100K–$1M ss20–49 employees
ss≤$100K ss5–19 employees
ss1–4 employees
INDUSTRY1,2 (% of employer firms)
Nonmanufacturing goods Leisure &
production & associated services Retail hospitality Manufacturing
Professional services Business support & Healthcare Finance &
& real estate consumer services & education insurance
White 20% 19% 14% 14% 12% 11% 6% 4%
N=6,904
Hispanic 19% 23% 18% 8% 12% 9% 8% 2%
N=1,119
Black
N=1,775 16% 17% 20% 9% 16% 7% 13% 1%
Asian
N=983 15% 11% 20% 12% 20% 17% 2% 2%
20%
1 Percentages may not sum to 100 because of rounding.
2 The percentages shown in this graphic may differ from those reported by the US Census because our weighting methodology does not incorporate cross
tabulations of demographic variables. Therefore, the figures in this graphic are a closer representation of our survey respondents rather than the most precise
estimate of the national small business population. Firm industry is classified based on the description of what the business does, as provided by the survey
participant. See Appendix for definitions of each industry.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 20
owned firms in aggregate given their geographic concentration.
Black- and Hispanic-owned small employer firms are more concentrated in the South Atlantic region, which includes states with a mix
of pandemic responses during late 2020, when the 2020 SBCS was fielded. For example, while Florida lifted COVID-19 restrictions relatively
DEMOGRAPHICS (Continued)
quickly, the South Atlantic also includes states such as Maryland and North Carolina, which maintained more strict guidelines. Given the
differences at the state and local levels with respect to the spread of the virus and government responses, census divisions are a useful
but imperfect indicator of the pandemic’s impact on aggregate business performance.
DIVISION12,3(%(%
CENSUS DIVISION of of employer
employer firms)
firms) Asian,N=983;
Asian, N=665;Black,
Black,N=1,775;
N=1,182;Hispanic,
Hispanic, N=859;
N=1,119;White,
White,N=6,880
N=6,904
West North
Central
Pacific East North
2%
3%Asian
Asian Central
40%
44% Asian
Asian 3%
4%Black
Black 4%
7% Asian
Asian
6% Black
10% Black 1%
1%Hispanic
Hispanic
New England
15% 18%
23% Black
Black
18% Hispanic
Hispanic
8%White
8% White 2%
5% Asian
Asian
14% 9% Hispanic
7% Hispanic
14% White
White 2%
2% Black
Black
15% White
15% White
4% Hispanic
4% Hispanic
5% White
6% White
Middle Atlantic
28%
24% Asian
Asian
8% Black
12% Black
13% Hispanic
13% Hispanic
13% White
12% White
South Atlantic
Mountain 13%
9% Asian
Asian
35%
31% Black
Black
4%
3% Asian
Asian
West South East South 25% Hispanic
27% Hispanic
3%
3% Black
Black Central Central 21% White
20% White
10%
9% Hispanic
Hispanic
7%
4% Asian
Asian 1%
1% Asian
Asian
9% White
8% White
17%
13% Black
Black 4%
6% Black
Black
24%
21% Hispanic
Hispanic <1%
1% Hispanic
Hispanic
10%
11% White
White 6% White
6% White
CREDIT
1 RISK
Ding, Lei and OFSánchez.
Alvaro FIRM22020. (% of“What
employer
Smallfirms)
Businesses Will Be Impacted by COVID-19?” Federal Reserve Bank of Philadelphia. April. www.philadelphiafed.
org/community-development/housing-and-neighborhoods/what-small-businesses-will-be-impacted-by-covid-19.
Mills, Claire Kramer and Jessica Battisto. 2020. “Double Jeopardy: COVID-19’s Concentrated Health and Wealth Effects in Black Communities.” Federal Reserve
Bank of New York. Low
August.credit risk Medium credit risk High credit risk
www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2020/DoubleJeopardy_COVID19andBlackOwnedBusinesses.
2 The percentages represent the share of firms in their respective race/ethnicity categories that are located in each census division. Percentages sum within race
and ethnicity categories rather than within census divisions. Percentages may not sum to 100 due to rounding.
3 TheAsian
percentages shown in this graphic may differ from those reported by the US Census because our weighting methodology does not incorporate cross-
tabulations of demographic 68%
variables. Therefore, the 28% closer representation of ourWhile
figures in this graphic are a 4% this reportrather
survey respondents includes
than thefindings on
most precise
N=688
estimate of the national small business population. financing approval rates by credit risk
SMALLBlack
BUSINESS CREDIT SURVEY | 2021 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR
of firm, we acknowledge that questions 3
N=1,334
32% 45% 23% remain around the use of credit scores
in decisions to approve financing
Hispanic given the structural limitations that
N=852
47% 38% 15%
disadvantage people of color and the
firms they own.
White
N=4,973
71% 23% 6%
1 The percentages represent the share of firms in their respective race/ethnicity categories that are located in each census division. Percentages sum within race
and ethnicity categories rather than within census divisions. Percentages may not sum to 100 because of rounding. The percentages shown in this graphic may
differ from those reported by the US Census because our weighting methodology does not incorporate cross tabulations of demographic variables. Therefore,
the figures in this graphic are a closer representation of our survey respondents rather than the most precise estimate of the national small business population.
2 See Notes and Definitions on page iv for details on credit risk definitions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON FIRMS OWNED BY PEOPLE OF COLOR Source: 2021 Small Business Credit Survey, Federal Reserve Banks 21
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