Secular Trends in Minority-Owned Businesses and Small Business Finance

The number of minority-owned businesses has grown tremendously over the last few decades. However, a significant portion of these enterprises may be suboptimal in size and tend to be in service sectors. This suggests that a disproportionate number of these firms could be vulnerable or affected by demand shocks. In addition this article analyzes trends in financing sources and credit utilization for firms and finds that most small businesses had to rely on personal financing. Gaps in traditional financing sources remained widest among black-owned firms, compared to white-owned firms. The analysis suggests that policies that increase access to resources and financial capital are necessary to ensure the viability of the small business sector. In addition, targeted policies and initiatives to enhance financial inclusion for minority businesses remain warranted.