Why Are Small Business Owners Discouraged From Borrowing?

We investigate how gender and minority status affect the likelihood that small business owners are discouraged from seeking credit. Our analysis utilizes a nationwide survey of small businesses conducted by the Federal Reserve. The results indicate that female and minority owners are about 6.5% and 9.1% more likely to be discouraged from seeking credit at a bank than for their male and white/non-Hispanic counterparts. Our findings complement previous studies on discrimination in lending and illustrate a negative drag on the U.S. economy