Revised City of South Bend Disparity Study Report

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City of South Bend Disparity Study 2020 services and real estate industries (19 percent), and non -manufacturing goods production and associated services industry (18 percent). 159 Profitability Performance Index After controlling for other firm characteristics, the SBCS found that fewer minority-owned firms were profitable compared to non minority- owned firms during the prior two years. This gap proved most pro- nounced between White- (57 percent) and Black -owned firms (42 per- cent). On average, however, minority-owned firms and non minority- owned firms were nearly as likely to be growing in terms of number of employees and revenues. Financial and Debt Challenges/Demands The SBCS found that the number one reason for financing was to expand the business or pursue a new opportunity. Eighty-five percent of applicants sought a loan or line of credit. Black -owned firms reported more attempts to access credit than White -owned firms but sought lower amounts of financing. Black-, Hispanic-, and Asian -owned firms applied to large banks for financing more than they applied to any other sources of funds. Having an existing relationship with a lender was deemed more important to White -owned firms when choosing where to apply compared to Black-, Hispanic- and Asian -owned firms. The SBCS also found that small Black -owned firms reported more credit availability challenges or difficulties for expansion than White -owned firms, even among firms with revenues in excess of one million dollars. Black -owned firm application rates for new funding were 10 percentage points higher than White -owned firms; however, their approval rates were 19 percentage points lower. A similar but less pronounced gap existed between Hispanic- and Asian -owned firms compared with White -owned firms. Of those approved for financing, only40 percent of minority-owned firms received the entire amount sought compared to 68 percent of non minority-owned firms, even among firms with com- parably good credit scores. Relative to financing approval, the SBCS found stark differences in loan approvals between minority-owned and White -owned firms. When controlling for other firm characteristics, approval rates from 2015 to 2016 increased for minority-owned firms and stayed roughly the same 159. Forty-two percent of Black-ownedfirms, 21 percent of Asian -owned firms, and 24percent of His panic -owned firms were smaller than $100K In revenue size compared with 17 percent of White -owned firms. 0 2020 Colette Holt & Associates, All Rights Reserved. 85