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Race and Ethnicity

Research indicates that the number of firms owned by a person of color has grown in recent years, suggesting that these businesses may comprise an increasingly large share of the small business sector. However, Small Business Credit Survey (SBCS) data consistently show that firms owned by a person of color—both new businesses and established ones—face more challenges than their white-owned counterparts and are more likely to be denied financing when they apply.

The SBCS uses US Census-defined categories of race and ethnicity. We use simplified, mutually exclusive race/ethnicity labels to indicate that more than 50 percent of the business is held by owner(s) of the given race/ethnicity. As such,

  • “American Indian or Alaska Native” refers to non-Hispanic American Indian (Native American) or Alaska Native.
  • “Asian” refers to non-Hispanic Asian or Pacific Islander.
  • “Black” refers to non-Hispanic Black or African American.
  • “Hispanic” refers to all firms owned by individuals of Hispanic or Latine ethnicity, regardless of their race.
  • “White” refers to non-Hispanic white, Middle Eastern, or North African.

Along with the owner’s race and ethnicity, the SBCS collects other demographic characteristics of businesses’ owners, such as their age. Analyzing owner demographics in conjunction with firm demographics like industry provides a richer understanding of small business conditions.

Business owners working at their place of business