Revised City of South Bend Disparity Study Report

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City of South Bend Disoarity Study 2020 vi. Personal Finances Black- and Hispanic -owned firms relied more frequently on personal credit scores. Large shares of Black and Hispanic firm owners reported personal credit scores below 720. Larger shares of White and Asian firm owners reported scores in excess of this amount. vii. Debt and Collateral Black -owned firms less frequently had outstanding debt or relied upon business assets to secure debt. Hispanic -owned firms less frequently relied on personal guarantees or business assets as collateral. viii. Demand for Financing In 2018, a smaller share of Asian -owned firms and a larger share of His- panic -owned firms applied for financial assistance, compared to White - owned firms. The share of Black- and Asian -owned firms that applied for financing decreased between 2016 and 2018. Larger shares of Asian- and Black -owned firms applied for financing to be able to meet operating expenses. Larger shares of Hispanic- and Black -owned firms applied to expand or pursue new opportunities compared to White -owned businesses. The most frequent reasons for applying for financing were desire to expand the business, pursue new opportunity or acquire business assets followed by desire to meet operating expenses. ix. Non -Applicant Findings Minority-owned firms less frequently than White -owned firms reported that they did not apply for credit because they had sufficient financing in place. Larger shares of minority-owned firms reported not applying for financing as they believed that they would be turned down by lend- ers. X. Financing Amounts and Shortfalls On average, Black -owned firms tended to apply for smaller amounts of financing. They were nearly twice as likely to be turned down com- pletely compared to White -owned businesses. Asian- and White - owned applicant firms more frequently received approval for greater shares of their applications. Xi. Financing Received by Risk and Denial Reasons Minority- and White -owned firms did not significantly differ relative to why they received less financing or why their applications were denied. The reasons for denial were: (1) low credit score; (2) too much debt 90 0 2020 Colette Holt & Associates, All Rights Reserved.