Minority
Population and
Business Trends
Minority firms are defined as those firms owned by African Americans, Hispanics, Asians, Pacific Islanders, American Indians, and Alaska Natives. The data presented below are from the United States Census Bureau's 1992 and 1987 Survey of Minority-Owned Business Enterprises (SMOBE). These surveys cover individual non-proprietorship, partnerships and subchapter S corporation (corporations with fewer than 35 shareholders who choose to be taxed as individuals rather than corporations). SMOBE does not survey other types of corporations, so larger firms are not included.
Although minorities constitute about 25.2 percent of the United States population, they own only 11.6 percent of all businesses and earn 6.2 percent of all receipts.
Hispanic owners accounted for 42% of the firms owned by minority men: African American owners accounted for 39% of the firms owned by minority women. The number of businesses owned by minorities in the United States increased 60% from about 1.3 million in 1987 to 2.1 million in 1992. The receipts of these firms increased even more dramatically, by more than 128 percent. Hispanics experienced the largest increase (349,335) and African Americans the smallest increase (196,747) in businesses owned.
In 1992, 1.2% (24,380) of minority-owned firms had sales of $1.0 million or more, and 46% (904,226) of these firms had receipts under $10,000.
Firms owned by African American men and women had lower average receipts ($69,000 and $31,000 respectively) than those owned by Hispanic men ($106,000) and women ($70,000). In contrast, firms owned by non-Hispanic white men and women had average receipts of $250,000 and $115,000, respectively.
Total Capital Needed
In 1992, black firms surveyed by SMOBE accounted for lowest total number of paid employees (345,193), while Asian-owned firms accounted for the highest number (860,408). Hispanic firms had (691,056) paid employees.
About 66.5% of black owners, 58.6% of Hispanic owners, and 53.9% of non-Hispanic white males used less that $5,000 in start-up capital.
Black-owned businesses started with less equity capital ($12,224), on average, than white-owned firms ($17,488).
Black owners in 1992 were less likely than other owners have received bank financing for their businesses. Those who received financing obtained smaller bank loans, on average, than their white counterparts. Black borrowers received average loans of .92 cents per equity dollar, all factors constant, while whites receive $1.17 per equity dollar in loans.
Prospective lenders were four times more likely to deny credit to black-owned firms and twice as likely to deny it to Asian-owned firms than they were to deny it to firms owned by non-Hispanic whites.
Instead black-owned firms accessed less-favorable forms of consumer credit, such as credit cards and home equity loans (29.6 percent), more often than white borrowers (18.4 percent).
References
United States Census Bureau, Number of Minority-Owned Businesses and Revenues Increase Substantially Between 1987 and 1992, Census Bureau Reports. Accessed n the Internet at http://www.census.gov/press-release/cb96-188.html, August 16, 2000
Milkin Institute, Policy Brief: Minority-Owned Businesses. Accessed on the Internet at http:www.milken-inst.org/mod22/intro.html, August 16, 2000
Prepared by Cassandra Cantave and Roderick Harrison for the Joint Center for Political and Economic Studies. May, 2000.
