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City of South Bend Disparity Study 2020 <br />already; (3) insufficient collateral; (4) too new/insufficient credit his- <br />tory; and (5) weak business performance. <br />xii. Credit Products <br />Most credit products firms sought did not differ significantly by race or <br />ethnicity of firm ownership. However, Hispanic -owned firms turned to <br />merchant cash advances more frequently than White -owned firms. <br />xiii. Loan or Line of Credit Sources <br />A larger share of Hispanic -owned applicants turned to large banks or <br />online lenders for financing compared to White -owned applicants. <br />However, they were less likely to turn to small banks or community <br />development financial institutions ("CDFI"). Black -owned firms were <br />more likely to turn to online lenders, credit unions, and CDFIs. They <br />were also less likely to turn to small banks. <br />AV. Reasons for Applying at a Source <br />Reasons for purchasing financing at large banks, small banks, or online <br />lenders did not differ markedly for minority- or White -owned firms. <br />However, minority-owned firms less frequently cited an existing rela- <br />tionship with a lender as a reason to apply for financing at either a <br />small bank or an online lender. <br />XV. Lender Satisfaction <br />A smaller share of Asian -owned firms were dissatisfied with their <br />lender in 2018 compared to 2016. A larger share of Black- and Hispanic - <br />owned firms were dissatisfied with their lender than were White - <br />owned firms. White -owned firms were more satisfied with their lenders <br />at small or large banks than were minority-owned firms. <br />xvi. Challenges Applying at a Source <br />Larger shares of minority-owned firms reported experiencing chal- <br />lenges in their application process or experienced high interest rates <br />when applying at small banks. <br />E. Evidence of Disparities in Access to Human Capital <br />There is a strong intergenerational correlation with business ownership. The prob- <br />ability of self-employment is significantly higher among the children of the self- <br />employed. This was evident in the large number of non-M/WBEs in our interview <br />groups who were second or even higher generation firms doing business for the <br />market area. This disadvantages minorities, whose earlier generations were <br />0 2020 Colette Holt & Associates, All Rights Reserved. 91 <br />