LGBTQ-Owned Small Businesses in 2021
Using data from the Federal Reserve Banks’ annual Small Business Credit Survey (SBCS), the Center for LGBTQ Economic Advancement & Research (CLEAR) and the Movement Advancement Project (MAP) have created a first-of-its-kind look at the financial health and needs of LGBTQ-owned small businesses.
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- LGBTQ small businesses were more likely to also be women-owned and immigrant-owned, compared to non-LGBTQ businesses. More LGBTQ-owned firms were also majority-owned by women (34% of LGBTQ firms vs. 20% of non-LGBTQ firms) and majority-owned by immigrants (21% vs. 15%).
- Despite stereotypes about where LGBTQ people tend to live and thrive, the largest share of LGBTQ businesses was in the South (31%), and LGBTQ businesses were also roughly equally likely as non-LGBTQ businesses to operate in rural areas.
- LGBTQ businesses were more likely to report operational and financial challenges, and were also more likely to report taking a variety of different measures in response to these challenges. For example, more than half of LGBTQ-owned businesses (53%) reported difficulties ensuring the health and safety of their customers and employees, compared to 37% of non-LGBTQ businesses. In response, LGBTQ firms were also more likely to report they had temporarily closed, reduced hours, or turned down work in the prior year (53% vs. 37%).
- More LGBTQ businesses were negatively financially impacted by the COVID-19 pandemic: 61% of LGBTQ firms reported financial losses in 2020, compared to 48% of non-LGBTQ firms. This disparity continued into 2021, with 85% of LGBTQ firms reporting that the pandemic was having a negative effect on their business at the time of the survey, compared to 76% of non-LGBTQ firms.
- LGBTQ businesses were more likely to apply for pandemic relief but less likely to receive it. The majority (57%) of LGBTQ-owned businesses applied for relief through the Paycheck Protection Program, compared to 47% of non-LGBTQ businesses. However, one-in-six LGBTQ firms (17%) reported that they had received none of the funding that they had applied for in 2021, compared to only one in ten non-LGBTQ businesses (10%).
- LGBTQ businesses were equally likely to apply for loans or financing in general, but again less likely to receive it. About 46% of LGBTQ-owned businesses reported that they had received none of the financing that they had applied for in the past year, compared to only 35% of non-LGBTQ businesses that applied for funding. Notably, LGBTQ-owned businesses were more likely than non-LGBTQ businesses to explain their denial was due to lenders not approving financing for “businesses like theirs” (33% vs. 24%), among other reasons.