Credit Availability for Minority Business Owners in an Evolving Credit Environment: Before and During the COVID-19 Pandemic

This paper applies data from the Small Business Credit Survey (SBCS) to estimate disparities in access to small business financing through loan denials and discouragement. The authors find that substantial credit disparities continue to exist despite the growth of fintech lenders, which prior research shows have expanded the set of small businesses receiving credit. Because the pandemic period brought many direct changes to the business and lending environment, we separately analyze the change to lending in 2020. Paycheck Protection Program (PPP) loans represented an unprecedented support for small businesses, support that was not dependent on the creditworthiness of businesses, but minority-owned businesses are estimated to have received a smaller fraction of the funds they applied for from the program.