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Women- and minority-owned small businesses had a tougher time accessing capital during the pandemic—but business confidence is rising

Women- and minority-owned businesses were more likely to report being rejected for loans or lines of credit in the last year – excluding government-funded COVID-19 relief loans – than the small business population as a whole. That’s a key finding in a new survey from Intuit® QuickBooks®. Although this COVID-19 “lending gap” has hampered many small businesses in the past year, there are signs of renewed confidence in 2021.

QuickBooks surveyed small businesses with fewer than 100 employees about their funding needs during the COVID-19 pandemic and how their borrowing confidence has been affected. Unsurprisingly, small businesses’ need for funding grew during the pandemic, especially in the last few months. Seven out of ten small businesses have applied for loans or lines of credit during the COVID-19 pandemic, excluding government-funded COVID-19 relief programs such as the Paycheck Protection Program. Black- and Hispanic-owned businesses have been the most likely to seek funding during the pandemic, with up to 80% applying for a line of credit or loan since March 2020.

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Most small businesses also report that more funding is being made available to them in 2021 than in 2020. About one in ten (11%) small businesses report having a loan or credit application rejected since January 2021 but the rejection rates are higher for women- and minority-owned businesses – 16% for women-owned businesses, 17% for Black-owned businesses, and 18% among Hispanic-owned businesses.

The key takeaways from the survey highlighted below demonstrate the importance of making capital and resources easier to access and more equitable for small businesses.

Need for funding remains — even as the economy improves

Black- and Hispanic-owned businesses have been the most likely to seek funding during the pandemic, with up to 80% applying for a loan or line of credit since March 2020.

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So far this year, 44% of women-owned businesses, 56% of Hispanic-owned businesses, and 58% of Black-owned businesses have reported at least one successful loan or credit application.

For some, however, the need for funding appears to be growing. Black- and women-owned businesses submitted three times more funding applications this year compared to the first nine months of the pandemic. On average in the past 12 months, small businesses made about five funding applications each. Among women- and minority-owned businesses, the average rises to six or more.

Small businesses increasingly look to online lenders

In the first nine months of the pandemic, 8% of women-owned businesses report getting funding from an online lender. Since January, this has risen to 10%. For Hispanic-owned businesses, it increased from 9% to 11%, and for Black-owned businesses, it has gone up from 9% to 12%.

The pattern holds when examining the annual revenue of survey respondents’ businesses, with smaller companies more likely to seek funding from digital lenders. So far this year, just 4% of small businesses with revenue over $1 million report getting funding from an online lender. Among those with annual revenue less than $1 million, this rises to 10%.

Small businesses’ lending confidence weakened but are optimistic on recovery

The pandemic has dented small businesses’ overall confidence in their ability to get funding. This is especially true among Hispanic-owned businesses. The percentage of Hispanic-owned businesses that report feeling “very confident” they can get the funding they need today declined by 22 percentage points compared to pre-pandemic levels. Women-owned businesses report a similar trend, with confidence declining by 13 percentage points.

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The least confident businesses were those with the smallest annual revenue. Just 26% of businesses with less than $100,000 in annual revenue are currently “very confident” they can get the funding they need. Among larger businesses with more than $1 million in annual revenue, that number jumps to 47%.

However, small businesses are more upbeat about what lies ahead. Most optimistic of all are Black-owned businesses, 70% of which anticipate higher revenue over the next 12 months while 46% predict more capital expenditure.

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When it comes to hiring, 44% of small businesses expect to hire more full-time employees this year, compared to just 11% who predict that the number of full-time employees in their workforce will go down. Hispanic-owned businesses expressed the most confidence in hiring more full-time employees.

Download the report for more insights from the QuickBooks Small Business Access to Capital Survey. For a visual breakdown of key takeaways, download this infographic.


Online questionnaire fielded by Qualtrics for QuickBooks between March 19, 2021 and March 22, 2021. Completed by 800 small businesses with annual revenue of more than $5,000 and less than 100 employees. Respondents comprised 404 business owners and 396 senior leaders with good knowledge of the business’ finances. There are 290 women-owned businesses in the sample, 123 Black-owned businesses, and 122 Hispanic-owned businesses. All data excludes government-funded COVID-19 relief loans such as the Paycheck Protection Program.

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