UW study finds higher interest rates, collateral and cosigner requirements for minority- and women‑owned businesses

A University of Washington study presented Jan. 29 to the Senate Committee on Business, Financial Services and Trade found that Asian American, Black and Hispanic business owners and women‑owned firms paid materially higher interest rates and faced stricter collateral or cosigner requirements than similarly situated white and male counterparts.

The report, led by Michael Virchow, director of the Consulting and Business Development Center at the UW Foster School of Business, used a national dataset of roughly 300,000 business owners and analyzed loans completed between January 2022 and May 2023 to isolate differences in pricing by race, ethnicity and gender after adjusting for conventional credit‑risk factors.

The study matters because higher financing costs directly affect firms’ ability to hire and expand, the researcher told senators. “The real life importance of this is that this is about jobs,” Virchow said. “If the cost of doing business is higher, there’s fewer jobs that are going to be created.”

Virchow said the analysis controlled for a broad set of…