Rather than seek financing from banks and credit unions, womenand minorities are more likely to turn to their own savings tostart or grow their businesses.
|According to a new report from the SBA Office of Advocacy, in the current financial climate, newhigh-tech businesses rely more than other firms on outside loansand investments, while non-technology businesses owned by African Americans, Latinos and women simply operate on less capital.
|The report, Access to Capital among Young Firms,Minority-owned Firms, Women-owned Firms, and High-tech Firms,used data from the Kauffman Firm Survey to look at new businesses'access to capital during the 2004-2010 period, the SBA said.
|African American and Latino owners of young firms were lesslikely than others with similar credit scores to have access tobank financing, the data showed. During the financial crisis, womenand minority owners of new startups were also less likely to applyfor credit, fearing loan denial.
|Alicia Robb, the author of the report, said she found thatminority firms in particular rely more on their own funds and haveless capital to start up and grow.
|Still, high-tech businesses that rely on patents, copyrights,and trademarks also faced bank financing hurdles possibly becausetheir products rely on knowledge, which is harder for banks toassess than physical assets, according to the report.
|The full reportis available on the SBA's Office of Advocacy website.
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