WASHINGTON, -- United States Senators Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, and Ranking Member Olympia J. Snowe, R-Maine, held a hearing entitled "Assessing Access: Obstacles and Opportunities for Minority Small Business Owners in Today's Capital Markets." Testifying before the Committee, Small Business Administration officials, small business leaders, and entrepreneurs discussed the opportunities and obstacles in gaining adequate access to capital for minority small business owners.
"Since becoming Chair of this Committee over a year ago, I have made access to capital for all small businesses a top priority," Senator Landrieu said. "The current economic recession has seen credit tighten drastically and many banks have withdrawn from or reduced their lending activity to small businesses. Minority-owned small businesses, many of whom have difficulty accessing credit under optimal economic conditions, have been significantly affected by the current economic downturn. We are focusing many of our efforts on freeing up the credit lines for minority entrepreneurs to ensure that their small businesses are able to compete with other small firms in the global economy."
"The market for small business capital, across all populations, is still suffering through some of the worst effects of the recession," said Ranking Member Snowe. "And nowhere are the impacts of this trend more devastating than in minority communities, given that African-Americans and Hispanics face alarming 16.5 and 12.6 percent unemployment rates, respectively. Today's witnesses provided our Committee with invaluable insight into the unique and persistent problems facing minority small businesses, and I thank them for their testimony. Moving forward, I pledge to continue my work with Chair Landrieu and others to help turn our nation's economy around and put the American dream of entrepreneurship in the hands of millions more citizens from all walks of life."
According to some research by Dr. Robert Fairlie, a Professor of Economics at the University of California, minority entrepreneurs face increased scrutiny in finding and receiving capital. In his study, Dr. Fairlie notes several constraints minority-owned small businesses face, including limited wealth, high loan denial rates, high interest rates and lending discrimination. His research shows that minority entrepreneurs face a denial rate of 31.5 percent, as opposed to 12.3 percent for non-minority entrepreneurs. His study also suggests that lending discrimination plays a major role in the size of loans minority small business receive, with the median loan value $46,514 for minority-owned firms, compared to$108,912 for non-minority firms.
A full video of the hearing can be viewed by clicking here.
SOURCE U.S. Senate Committee on Small Business & Entrepreneurship