Identifying successful versus unsuccessful loans held by the minority small business clients of an OMBE affiliate

Successful and unsuccessful loans to minority small businessmen are discriminated using applicant demographic and firm characteristic variables available at the time of application for 65 firms in Cleveland, Ohio. The businessmen studied are the clients of an affiliate of the Office of Minority Business Enterprise and represent a unique segment of the small business community, which has proven to be particularly success resistant. A set of demographic and firm variables are identified that are associated with loan success and can be used to construct a profile of preferred loan applicants. The relative importance of the different variables in discriminating between the two groups of loans and their combined explanatory power is reported.