NEW JERSEY – A new study shows New Jersey is the No. 5 best state for minority entrepreneurs to succeed.
A record 1.2 million minority-owned businesses are operating in the U.S. Succeeding as an entrepreneur is tough, 20% fail in the first year, but minorities have an even steeper hill to climb. Income inequality, limited access to loans, and other biases lead to a lack of capital needed to start businesses and survive the early years in the red.
Lendio Monday released a study on the Best & Worst States for Minority Entrepreneurs using the most recent data from the Census Bureau and the Small Business Administration (SBA).
The rankings were determined by analyzing myriad factors in all 50 states and D.C. including percentage of businesses that are minority owned, job growth at these companies, unemployment, and business loans to underserved communities.
Key Findings:
- New Jersey: Minorities own 24.6% of all businesses and 31% of startups under two years old. The number of jobs at these companies grew by 42% from 2019-2021. The state distributes more business loans to underserved communities ($399 per capita) compared to the national average ($351 per capita) through the Federal Community Reinvestment Act.
- The National Outlook is Mixed: From 2017-2020, companies started by minorities increased substantially across the country: Native Americans (64.8%), Pacific Islanders (28.8%), Latinos (16.5%), Blacks (13.6%), and Asians (10.2%). However, while 52% of business loans get fully approved for whites, that drops to 35% for Asians, 28% for Hispanics and 27% for blacks.
- The 10 Best States for Minority Entrepreneurs: Hawaii, Maryland, Maine, Delaware, New Jersey, Florida, California, Virginia, Texas, and Idaho.
“By setting up shop in a favorable location, minority entrepreneurs improve their chances to succeed. Thankfully, many lower ranking states are increasing their investments in underserved communities,” Lendio said.
