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New Analysis Finds Nearly Half of LGBTQ-Owned Small Businesses That Applied For Loans Were Denied Financing

Rebecca Farmer, Movement Advancement Project | 303-578-4600 ext 122

July 20, 2022—Today, the Center for LGBTQ Economic Advancement & Research (CLEAR) and the Movement Advancement Project (MAP) released a groundbreaking report on the financial health and needs of LGBTQ-owned small businesses, using data from the Federal Reserve Banks’ annual Small Business Credit Survey (SBCS). The most recent SBCS, conducted in 2021, included new questions about LGBTQ ownership of small businesses across the country.  

The Federal Reserve defines LGBTQ-owned small businesses as businesses with fewer than 500 employees where people who identify as lesbian, gay, bisexual, transgender, or queer own half or more of the business. 

CLEAR and MAP analyzed this publicly available data, and the joint report’s key findings include: 

  • LGBTQ businesses were equally likely to apply for loans or financing in general, but 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.

  • 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 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.  

"The importance of LGBTQ-inclusive data collection cannot be understated. As shown in this report, LGBTQ-owned small businesses have unique experiences, including notable disparities in how they are treated by financial institutions and how they continue to be impacted by the COVID-19 pandemic. The findings also illustrate the clear need and opportunities for better supporting these businesses and the local communities they serve and enrich," said Logan Casey, Senior Policy Researcher & Advisor with the Movement Advancement Project.

“Despite the cultural and social significance of LGBTQ-owned small businesses in creating a thriving LGBTQ+ community, LGBTQ-owned businesses are woefully under-served by the financial services industry,” said Spencer Watson, President & Executive Director of the Center for LGBTQ Economic Advancement & Research (CLEAR). “LGBTQ+ small businesses are engines of self-help for the LGBTQ+ community. Financial inequality for LGBTQ-owned small businesses contributes to food insecurity, housing insecurity, and poorer health outcomes for LGBTQ+ people in the United States. Improving financial equity for LGBTQ-owned businesses will support the economic vitality of LGBTQ+ workers, communities, and the entire U.S. economy.” 

The report is available online at 

Center for LGBTQ Economic Advancement & Research is a 501(c)(4) non-profit organization. CLEAR’s mission is to empower LGBTQ households, organizations, and communities with fair and equal access to LGBTQ-affirming financial education and services to meet under-served LGBTQ financial needs and help LGBTQ communities achieve their unique economic goals.  

Movement Advancement Project (MAP) is an independent, nonprofit think tank that provides rigorous research, insight, and analysis that help speed equality for all, including lesbian, gay, bisexual, transgender, and queer people. 

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