Revised City of South Bend Disparity Study Report

Home Browse Search

City of South Bend Disoarity Study 2020 for non minority-owned firms. Hispanic- and Black -owned firms reported the highest approval rates with online lenders. 160 Low credit score and lack of collateral were the top reported reasons for denial of Black- and Hispanic -owned firms. Satisfaction levels were lowest with online lenders for both minority- and non minority-owned firms. A lack of transparency was cited as one of the top reasons for dis- satisfaction for minority applicants and borrowers. Forty percent of non -applicant Black -owned firms reported not apply- ing for financing because they were discouraged (expected not to be approved), compared with 14 percent of White -owned firms and 21 percent of Hispanic -and Asian -owned firms. The use of personal funds was the most common action taken in response to financial challenges, with 86 percent of Black -owned firms, 77 percent of Asian -owned firms, 76 percent of White -owned firms, and 74 percent of Hispanic - owned firms using this as its source. A greater share of Black -owned firms (36 percent) and of Hispanic - owned firms (33 percent) reported existing debt in the past 12 months of less than $100,000, compared with 21 percent of White -owned firms and 14 percent of Asian -owned firms. Black -owned firms applied for credit at a higher rate and tended to submit more applications, compared with 31 percent of White -owned firms. Black-, Hispanic-, and Asian -owned firms applied for higher -cost products and were more likely to apply to online lenders compared with White -owned firms. Business Location Impact Controlling for other firm characteristics, minority-owned firms located in low-income minority zip codes reported better credit outcomes at large banks, compared with minority-owned firms in other zip codes. By contrast, at small banks, minority-owned firms located in low- and moderate -income minority zip codes experienced lower approval rates than minority-owned firms located in other zip codes. Non -Employer Firms Non -employer firms reported seeking financing at lower rates and experienced lower approval rates than employer firms, with Black - owned non -employer firms and Hispanic -owned non -employer firms experiencing the most difficulty. 160. The share of minority-owned firms receiving at least some financing was lower across all financing products, compared with nonminority. 86 0 2020 Colette Holt & Associates, All Rights Reserved.