Minority Businesses Struggling With Credit According to Experian Report

Minority businesses

Minority businesses still struggle with credit in a way other small businesses do not, a report from global business analytics firm Experian says.

According to Experian, minority owned businesses see an average business credit score of 49.7, five points lower than other U.S. businesses.

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Meanwhile, minority small business owners struggle with an average consumer credit score of 707, a full 15 points lower than the consumer credit score of other U.S. small business owners.

“Given that minority-owned small businesses make up such a small percentage of the general small-business population, approximately 21 percent, industry professionals and regulators are becoming more interested in helping this segment grow and succeed,” said Pete Bolin, director of consulting and analytics for Experian in an official release.

At least part of the problem may have to do with how these small business  owners handle debt, the report found.

For example, 1.2 percent of minority small business owners have at least one business credit card account severely delinquent (91-plus days), compared to 1.1 percent of other small business owners.

Consumer credit card accounts showed an even larger gap, the report said. According to the data, 8.3 percent of minority business owners have at least one consumer credit card account severely delinquent (90-plus days), compared to 6.8 percent of other small business owners.

Here are some other conclusions from the report:

  • Minority small business owners saw an average outstanding business balance of $8,759 compared to the general small business owner group with an average outstanding balance of $9,066.
  • Meanwhile, minority small business owners saw an average consumer income of $92,489 compared with average consumer income of $92,338 for most small business owners.
  • But more telling was the difference in education. For example, 68.3 percent of small business owners had at least some college experience compared to 65.6 percent of minorities business owners.

“A primary component of accomplishing this objective is educating small-business owners on the importance of maintaining a positive credit profile,” Brolin said. “For example, keeping debt levels low and paying bills in a timely manner can help small-business owners better position themselves for growth opportunities.”

Experian recommends several online resources to help owners learn more about small business credit.

BusinessCreditFacts.com teaches would-be entrepreneurs about managing business credit. Experian Business Credit allows small businesses to access their credit reports, and Business Score Planner provides entrepreneurs with information about the impact of consumer credit information on business credit scores.

The report is drawn from a sampling of Experian’s consumer and business credit database. For more from the report read the infographic below:

minority businesses
Image: Experian
Minority Businesses Photo via Shutterstock
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Michael Guta Michael Guta is the Assistant Editor at Small Business Trends and currently manages its East African editorial team. Michael brings with him many years of content experience in the digital ecosystem covering a wide range of industries. He holds a B.S. in Information Communication Technology, with an emphasis in Technology Management.

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