Black and White: Access to Capital Among Minority-Owned Start-ups

We used confidential and restricted-access data from the Kauffman Firm Survey matched administrative on credit scores to explore racial disparities in access capital for new business ventures. The novel results inequality start-up financing indicate that Black-owned start-ups start smaller stay over entire first eight years of their existence. Black face more difficulty raising external capital, especially debt. find creditworthiness constrain entrepreneurs, but perceptions treatment by banks also hold them back. entrepreneurs apply loans less often than White largely because they expect be denied credit, even when have a good history settings where strong local favor development. This paper was accepted David Simchi-Levi, finance.