Capital Issues and the Minority-Owned Business

This article presents some of the results from an unusual survey of small business owners who differ in their ethnicity: Asians, blacks, Hispanics, and nonminorities. Contrary to the prevailing view of black and Hispanic business owners and their firms, the blacks and Hispanics in the data base—in general and on average—had the same human and financial capital as their Asian and nonminority counterparts. As a result, the black-owned and Hispanic-owned firms performed as well as the Asian-owned and nonminority-owned firms. Nevertheless, black business owners had lower success rates than nonminority men in obtaining commercial bank loans, although the terms for loans granted were similar for the two groups. In light of the apparent credit discrimination, U.S. Small Business Administration (SBA) loans remain an important source of debt-type capital to black-owned firms.