Minority Small Business Owners Have More Income but Less Credit?

A third of minority small businesses are run by women and nearly 45 percent of all minority-owned businesses are from California, Florida and Texas.

And most of them run restaurants and beauty services and their average credit score is nearly five points lower than the average for the general small-business population, even though they earn higher and are heel-to-heel in credit card delinquencies. 1.2 percent of minority small-business owners have at least one business credit card account that is severely delinquent (91-plus days) compared to 1.1 percent of the general small-business owner population. And the average consumer income for minority business owners is $92,489, more than the average income of the general small business owner of $92,338.

Credit-reporting company Experian in its new study on small businesses, however said that minority small business owners fall behind on managing credit — 15 points lower than the overall average for small-business owners, to be precise. The report does not explain why.

But “Gaining insight into the trends and behaviors of the small-business community is imperative given its importance to the growth and success of our overall economy,” said  Pete Bolin, director of consulting and analytics for Experian, which also released tools and resources on credit management.

The market of lending to minority small business owners is well recognized. Apart from the SBA micro loans and community advantage loans that seek to bridge the gaps, the ‘Equal Credit Opportunity Act’ prevents lenders from discriminating against borrowers based on race and sex.