The issues firms of color face persisted through—and in some cases were exacerbated by—the pandemic, according to the Fed’s 2020 Small Business Credit Survey. Compared to white-owned businesses, firms owned by people of color saw steeper declines in sales and employment and reported weaker financial conditions. For example, 90% of Asian-owned firms reported a decrease in revenue, the most of any group of business owners.
When seeking emergency funding or applying for credit, firms owned by people of color also struggled to access the capital needed to survive the pandemic. In fact, Black- and Hispanic-owned firms were half as likely to be fully approved for financing as white-owned firms, the survey indicated.
The findings also highlighted significant differences in the experiences of Black-, Asian-, and Hispanic-owned firms compared to white-owned businesses. Understanding these differences can help policymakers better address the unique needs of these subsets of small businesses as they implement programs to support economic recovery post-pandemic.