Access to business loans by ethnic minority owners of small business in Scotland

Purpose: The purpose of this research is to investigate the difficulties faced by ethnic minorityowners of small businesses when applying for business loans in Scotland. Based on publishedsurveys in 2017, only 3% of ethnic minority owners of small business are in Scotland.Design/Methodology/Approach: Snowball sampling techniques were used to recruitparticipants. 20 face-to-face, in-depth interviews were conducted with ethnic minority businessowners in Scotland. The interviews were transcribed and then analysed using a thematic methodof analysis.Findings: This research found that lack of education, inability to apply online, lack ofunderstanding of the English language, high interest rates, lack of trust, nationality issues and 5years residency in the UK might be some of the reasons why ethnic minority owners of smallbusinesses cannot access business loans in Scotland. Some factors such as credit ratings,information asymmetry, credit history regarding previous loan, strict process of loans, harshcredits check and strict rules could be reasons why there is only 3% of small business owners inScotland are from ethnic minorities.This research identified factors including too much paperwork, unnecessary questions fromlenders, limited payback periods, fixed interest rates and slow responses from lenders as some ofthe terms and conditions discouraging interviewees from accessing business loans in Scotland.This research also identified factors such as professional fees, information opacity, and personalrelationships with bankers as being important to accessing business loans whilst and not beenaware of loans is one of the business challenges affecting ethnic minority business owners.Originality/value – Some research has been conducted relating to ethnic minority owners ofsmall business, but there is no research related to access to business loans by ethnic minorityowners of small business in Scotland in all aspects and context of this study.Contribution and Recommendations – This research contributed to knowledge, policy andmethodology. In terms of recommendation, this research recommended publicity andadvertising, empowerment programs, reduction of interest rate and fees and education on how toapply for loan,