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Borrowing Patterns for Small Firms: A Comparison by Race and Ethnicity


  • Susan Coleman

    (University of Hartford)


This article explores the use of debt capital by small firms using data from the 1998 Survey of Small Business Finances. An examination of the data reveals differences in the characteristics and borrowing experience of small firms by race and ethnicity. Results indicate that although minority firm owners were just as likely to apply for loans, they were significantly less likely to be approved for them. Further, black small business owners were less likely to even bother applying for a loan, because they assumed they would be denied. These findings have implications for the ability of minority small business owners to grow their firms and contribute to the economic well-being of their communities.

Suggested Citation

  • Susan Coleman, 2002. "Borrowing Patterns for Small Firms: A Comparison by Race and Ethnicity," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 7(3), pages 77-98, Fall.
  • Handle: RePEc:pep:journl:v:7:y:2002:i:3:p:77-98

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    References listed on IDEAS

    1. Cavalluzzo, Ken S & Cavalluzzo, Linda C, 1998. "Market Structure and Discrimination: The Case of Small Businesses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 771-792, November.
    2. Timothy Bates, 1989. "The changing nature of minority business: A comparative analysis of asian, nonminority, and black-owned businesses," The Review of Black Political Economy, Springer;National Economic Association, vol. 18(2), pages 25-42, September.
    3. Cohn, Richard A, et al, 1975. "Individual Investor Risk Aversion and Investment Portfolio Composition," Journal of Finance, American Finance Association, vol. 30(2), pages 605-620, May.
    4. Morin, Roger A & Fernandez Suarez, Antonio, 1983. " Risk Aversion Revisited," Journal of Finance, American Finance Association, vol. 38(4), pages 1201-1216, September.
    5. James S. Ang, 1991. "Small Business Uniqueness and the Theory of Financial Management," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(1), pages 1-13, Spring.
    6. Frederick C. Scherr & Timothy F. Sugrue & Janice B. Ward, 1993. "Financing the Small Firm Start-Up: Determinants of Debt Use," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 3(1), pages 17-36, Fall.
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    More about this item


    Small Firms; Borrowing Patterns; Borrowing; Lending; Race; Ethnicity;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination


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