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Press Release

Atlanta and Cleveland Feds release report on minority-owned small businesses based on findings from the 2016 Small Business Credit Survey

The report compares the experiences of minority-owned small businesses to firms with more than 50% white ownership

The Federal Reserve Bank of Atlanta and the Federal Reserve Bank of Cleveland today issued the third in a series of reports that examines the results of an annual survey of small business owners. The Report on Minority–Owned Firms focuses on firms in which Asian, African American, Hispanic, or Native American individuals own more than 50% of the business.

The Report found that, although many minority small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances. These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate.

Key findings can be found in the Report on Minority–Owned Firms’ executive summary. Overall, the survey shows:

  • The percentage of minority–owned firms operating at a profit is significantly below that of nonminority firms, a gap that is most pronounced between black– and white–owned firms.
  • Black–owned firms report more credit availability challenges or difficulties obtaining funds for expansion than nonminority–owned firms—even among firms with revenues of more than $1M.
  • The number one reported reason for applying for financing across all business ownership types is to expand business or pursue a new opportunity.
  • Black–owned firm application rates for new funding are 10 percentage points higher than white–owned firms, but their approval rates are 19 percentage points lower.
  • Forty percent of nonapplicant black–owned firms report not applying for financing because they were discouraged (i.e., they did not think they would be approved), compared with 14% of white–owned firms and 21% of Hispanic– and Asian–owned firms.
  • Looking at just firms that were approved for at least some financing, when comparing minority– and nonminority–owned firms with good personal and/or business credit scores, 40% of minority–owned firms received the full amount sought compared to 68% of nonminority–owned firms.
  • Black– and Hispanic–owned firms are less likely to apply for financing at small banks and more likely to apply at community development financial institutions (CDFIs) and online lenders, relative to white–owned firms. Large banks are the most common type of lender applied to overall.

Additional reports on the 2016 Small Business Credit Survey that were or will be released in 2017 take an in–depth look into other specific types of small businesses, including start–ups, women–owned small businesses, and microbusinesses.

About the Small Business Credit Survey (Survey)

The Survey collects information about business performance, financing needs and choices and borrowing experiences of firms with 500 or fewer employees. Responses to the Survey provide insight into the dynamics behind aggregate lending trends and about noteworthy segments of small businesses. The results are weighted to reflect the full population of small businesses. The Survey is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

The Survey was launched in 2014 through an effort that merged the regional surveys conducted by several Federal Reserve Banks. The 2016 Survey is the first iteration that was conducted on a national scale with involvement from all 12 Federal Reserve Banks and input collected across all 50 states. The 2016 Survey collected 15,991 responses in total, 10,303 of which were from employer firms (firms with at least one employee in addition to the firm owner). The Survey yielded 7,916 responses from employer firms with race/ethnicity information in 50 states and the District of Columbia.

Report findings are presented for four race/ethnicity categories: white, black or African American, Hispanic, and Asian or Pacific Islander. When the respondent sample size by race for a particular survey question is too small, the findings are reported in terms of minority versus nonminority firms [i.e., we compare the experience of minority–owned businesses to businesses with more than 50% ownership by white individual(s)]. For select key statistics, findings are reported for the 4,365 nonemployer respondents who provided race/ethnicity information. This is the first year of data available from this national survey. Over time it will enable more in–depth research on small businesses overall and various business segments.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.455.4479