When it comes to creating an atmosphere that fosters success by minority entrepreneurs, Kentucky has plenty of room for improvement.
That’s according to a recent study entitled “Best and Worst States for Minority Entrepreneurs” that was published by Lendio, a small business loan e-platform.
Kentucky ranked 46th on the list, which also included Washington, D.C., after it was determined that minorities own 7.7% of all businesses in the state. It should be noted, though, that the collective number of jobs at those businesses grew by 37% from 2019 to 2021.
On average, Kentucky gives out less business loans to underserved communities than the national average through the Federal Community Reinvestment Act ($244 per capita, compared to the $351 throughout the U.S), according to the study.
For comparison, Indiana ranked No. 29 on the list.
The top five best states for underrepresented entrepreneurs were (in order) Hawaii, Maryland, Maine, Delaware and New Jersey. The five at the bottom (from fifth to last) were Mississippi, Wisconsin, West Virginia, North Dakota and Montana.
A larger view
The study is based on data from the U.S. Small Business Administration (SBA) and the U.S. Census Bureau.
Looking further into the national picture, the number of businesses owned by Black, Latinx and Asian Americans reached record highs in 2020 with 1.2 million businesses, essentially doubling the amount that were established in 2007.
Furthermore, more than half of the approximatly two million businesses that have been started in the U.S. over the past 10 years were started by minority founders.
From 2017 to 2020, Native Americans had the highest jump in startups created in the U.S. at 64.8%, followed by Pacific Islanders (28.8%), Latinx (16.5%), Blacks (13.6%) and Asian Americans (10.2%).
The study also unveiled that 52% of white founders are approved for financing when applying for loans, compared to 35% of Asian American founders, 28% of Latinx founders and 27% of Black founders. The highest denial rate — meaning no partial approval — is Latinx founders at 51%, followed by Black founders (47%), Asian American founders (40%) and white founders (30%).
