Using recent data from the U.S. Census Bureau and the U.S. Small Business Administration, the study analyzed factors in all 50 states and Washington, D.C., including income equality, access to loans, percentage of minority-owned businesses, small business loans and homeownership rates.
There are 1.2 million active minority-owned businesses in the United States, and according to the study, 20 percent of them fail within the first year.
The study showed that low-scoring states, such as Mississippi, West Virginia and Wisconsin, experienced “a decline in the number of Community Advantage loans approved in their state from 2021 to 2022, as well as a low rate ownership of minority businesses.
Part of the SBA’s 7(a) Loan Program, Community Advantage Loans are designed to provide financing to small businesses in traditionally underserved markets, such as startups, veteran-owned businesses, and community businesses. low income.
“People of color only have 20% of American companies despite the makeup about 40% of the population,” the study indicates. “They have limited access to startup financinglack networks and mentoring programs and face systemic discrimination and bias.
From 2017 to 2020, there was a significant increase in the number of minority-owned businesses across the country: 64.8% for Native Americans, 28.8% for Pacific Islanders, 16.5% for Latinos, 13.6% for African Americans and 10.2% for Asians. According to National Minority Supplier Development CouncilMinority-owned businesses saw a 22% increase in revenue between 2019 and 2021 and employed approximately 865,000 people, according to the report.
Despite this growth, the number of business loans that are fully approved for financing is only 35% for Asians, 28% for Hispanics and 27% for African Americans, according to the report.
In Wisconsin, according to the report, the minority population makes up 21% — minorities own 8.2% of startups and 6.6% of all businesses less than two years old. From 2019 to 2021, these companies experienced 63% employment growth. Wisconsin provides fewer business loans to disadvantaged communities ($254 per capita). The national average is $351 per capita.
Compared to other states, Wisconsin has lower levels of income inequality, with a Gini index of 0.4464, according to the report.
With a lower level of income inequality, a high rate of minority business ownership (51.3%), and 40% job growth, Hawaii is the best state for entrepreneurs from minorities, followed by the nation’s largest states, including Florida, California and Texas.