Study shows: African-American and Hispanic businesses were half as likely to receive funding as white ones
The study showed that Black and Hispanic company owners received credit at the same risk level as businesses with a medium to high credit rating, according to credit rating.
Author:James PierceReviewer:Alberto ThompsonApr 21, 2021170 Shares170K Views
Because of the coronavirus pandemic, minority-owned companies closed at a greater pace and sales loss than did their white counterparts, the Federal Reserve reported in 2008.
From Thursday's study, it seems that businesses run by people of color cut back their activities during the pandemic. If capital was an issue for black-owned companies, they tended to use personal resources or to get into debt.
There is evidence that minority-owned companies and societies may have been disproportionately affected by the COVID-19 pandemic, the researchers pointed out in the study.
Non-essential loans to African-American and Hispanic business owners is half as likely to be accepted as to approve low-risk companies regardless of their race. With lower credit risk, the percentage of black and Hispanic company owners receiving funding was lower by 24% and 25%, respectively, than the corresponding figures for white- and more advantaged entrepreneurs.
The study showed that Black and Hispanic company owners received credit at the same risk level as businesses with a medium to high credit rating, according to credit rating.
Compared to other businesses, black-owned businesses were more adversely affected financially. Of those, 38% took out a loan from a friend or a parent, 25% used their own money, and the rest had to go without.
Any companies with less than 500 workers performed the survey last September and October.
James Pierce
Author
James Pierce, a Finance and Crypto expert, brings over 15 years of experience to his writing. With a Master's degree in Finance from Harvard University, James's insightful articles and research papers have earned him recognition in the industry.
His expertise spans financial markets and digital currencies, making him a trusted source for analysis and commentary. James seamlessly integrates his passion for travel into his work, providing readers with a unique perspective on global finance and the digital economy.
Outside of writing, James enjoys photography, hiking, and exploring local cuisines during his travels.
Alberto Thompson
Reviewer
Alberto Thompson is an acclaimed journalist, sports enthusiast, and economics aficionado renowned for his expertise and trustworthiness. Holding a Bachelor's degree in Journalism and Economics from Columbia University, Alberto brings over 15 years of media experience to his work, delivering insights that are both deep and accurate.
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