Credit Availability for Minority Business Owners in an Evolving Credit Environment

Disparities in access to small business financing through loan denials and discouragement are estimated using Federal Reserve Small Business Credit Survey data from 2016 to 2020. Substantial differences in credit denial rates continue to exist despite the growth of fintech lenders, which prior research has shown to have expanded the set of small businesses receiving credit. The pandemic period brought many direct additional changes to the business and lending environment, but these results show no evidence of trends in credit access over this period. The Paycheck Protection Program loans represented unprecedented support for small businesses that was not dependent on the credit worthiness of businesses, but minority-owned businesses are estimated to have received a smaller fraction of the funds that they applied for from the program in its 2020 implementation.