According to the 2000 U.S. Census, ethnic minorities will comprise 90% of the nation's population over the next 50 years--representing more than half of the country. This population boom has spawned a rapid growth of minority-owned businesses, which have grown twice as fast as all U.S. firms over the past five years.

To assist these emerging growth companies, the Small Business Administration (SBA)launched a variety of lending programs, such as the 7(A) Loan Guaranty Program for small businesses and the Certified Development Company (504) Loan Program to finance fixed assets, such as facilities or machinery.

From 1998-2001, the SBA issued on average less than $10 billion per year worth of 7(A) loans to small businesses, while minority firms received on average less than $3 billion per year, which represents 24% to 26% of the total number of loans. African American enterprises were the second-lowest recipients of these loans. "We respond to demand," says Mike Stamler, spokesperson for the SBA. "We have been encouraging all minority entrepreneurs to apply to these programs. But Asian Americans applied in greater numbers [throughout the four years]."

Of course, what kind of belt-tightening will occur in the wake of the September 11 attacks is anyone's guess. But minority entrepreneurs may have to start tapping more innovative capital resources (i.e. minority-focused venture capital funds or community-based securitization programs) to maintain their cash flow.

SBA's 7(A) Loan Guaranty Program *

                    1998   1999   2000   2001

PERCENTAGE GIVEN
TO MINORITY-OWNED
BUSINESS             24     26     26     25

AFRICAN-AMERICAN      4      5      5      4

HISPANIC              7      8      7      8

ASIAN                11     12     12     12

NATIVE AMERICAN       1      1      1      1

Note: Table made from bar graph.

Total Number of Loans
to Small Businesses

1998   42,268
1999   43,639
2000   43,748
2001   42,957

Note: Table made from bar graph.

SOURCE: SMALL BUSINESS ADMINISTRATION

* Rounded to the nearest whole number

COPYRIGHT 2002 Earl G. Graves Publishing Co., Inc.
COPYRIGHT 2002 Gale Group