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  • Writer's pictureRic Armstrong

Texas Among the Best for Small Business Diversity

Small businesses in Texas are among some of the most diverse in the nation, according to a new recently released report. Issued by, an online resource for business owners, the new report sheds light on the number of small businesses in your state and how many are owned by people of color.

The report found that of the 2.8 million small businesses in Texas, 710,215 are owned by people of color. This accounts for 25.4 percent of businesses in Texas.

Based on the report, Texas is the fourth best state for small-business diversity.

To determine which states have the highest percentage of minority-owned businesses, looked at the U.S. Small Business Association's 2020 small-business profiles, released in May 2020, just two months into the coronavirus pandemic.

Using the SBA's data, the website then figured out how many small businesses in each state were owned by people of color.

In doing so, found the country's largest states have some of the highest percentages of minority-owned firms. California has the most at just over 29 percent, while 25.4 percent of Texas small businesses are minority-owned.

In Alaska, considered the biggest state by acreage, 14.2 percent of small businesses are minority-owned.

The report also found the country's most diverse states aren't confined to one region. States on both coasts make it into the top 10. So did states in the West and South.

Here's a look at the top 10 states ranked by the percentage of minority-owned businesses in each state, according to the report:

  1. Hawaii: 39.1 percent

  2. New Mexico: 32.5 percent

  3. California: 29.3 percent

  4. Texas: 25.4 percent

  5. Arizona: 20.7 percent

  6. Florida: 19.5 percent

  7. Maryland: 19.3 percent

  8. Nevada: 18.5 percent

  9. Washington, D.C.: 18.5 percent

  10. Georgia: 18.4 percent

Businesses owned by people of color have been hit especially hard by the coronavirus pandemic. In May 2020, a poll conducted by the U.S. Chamber of Commerce found that a staggering 78 percent of minority small-business owners were concerned about the possibility of permanently closing their businesses. On the other hand, about 53 percent of non-minority small-business owners shared the same concerns.

As the year went on, the gap between the two groups narrowed. In August, the number of minority small-business owners concerned about closing their business dropped to 66 percent compared with 57 percent of non-minority small-business owners.

Still, minority-owned small businesses have been disproportionately affected by the pandemic, according to the U.S. Chamber's report. Here are a few ways owners have been hit:

  • Minority-owned businesses are more likely to have tried and failed in securing a loan — 13 percent versus 8 percent of non-minority businesses.

  • More minority-owned businesses expected revenue to decrease in 2020.

  • When it came to reopening their businesses, minority owners were more concerned about the risk the coronavirus posed to their customers than non-minority owners — 70 percent versus 58 percent of non-minority owners.

The report also found that a majority of small businesses believe it's important to take steps toward racial equality. In order to do this, business owners must commit to fairness in hiring, promotion and pay, owners said. Seventy-four percent of respondents said residents should take steps to support local Black-owned businesses.


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