Credit management is a challenging issue for minority small business owners, according to a new study by Experian. It looked at their overall financial health in the current economy, finding that they are slightly behind other business owners when it comes to credit scores and bill payment.
Minority-owned small businesses make up only 21% of the small businesses in the U.S., which according to Experian, has inspired regulators and industry professionals to help them grow their businesses.
“A primary component of accomplishing this objective is educating small business owners on the importance of maintaining a positive credit profile. For example, keeping debt levels low and paying bills in a timely manner can help small-business owners better position themselves for growth opportunities,” said Pete Bolin, director of consulting and analytics for Experian.
Credit scores are lower
A part of evaluating their financial health was looking at their business credit score. They found that when compared with other small business owners this segment of owners had a slightly lower score. With minority owners having an average of a 49.7 business score, which is 5 points lower than others.
What about their consumer credit scores? Here too they had somewhat lower scores, coming in with an average of 707, which was 15 points less than other owners.
When it came to paying on time there were some slight issues here too, with 1.2% reporting that they have at least one credit card that is severely delinquent, meaning 91-plus days past due, while 1.1% of their counterparts reported the same.
On the other hand, 8.3% of minority owners have at least one consumer credit card that was severely delinquent, while 6.8% of their counterparts reported the same level of delinquency.
If you’re wondering what businesses are trending with minority owners, the answer would be restaurants, with places to eat being the business of choice for 7.3%, followed by:
• Beauty shops
• Legal services
• Business services
• Real estate
How much are they making? According to the study across all industries, personal income averaged $92,489, which is on par with their counterparts.
When it comes to gender, 31% of minority business owners are woman, and almost half (45%) of all small minority run businesses are located in three states–California (23.4%), Florida (11.4%) and Texas (10.1%).