A new Ethnic Minority Business Task Force will help foster growth among black and minority ethnic (BME) firms and boost economic participation by BME entrepreneurs, Small Business Minister Margaret Hodge announced today. One of its tasks will be to investigate why ethnic minority businesses face additional barriers in access to finance, as highlighted by a recent survey commissioned by the Department for Trade & Industry (DTI).

Survey findings include:

* Ethnic minority-owned businesses pay higher bank loan charges than White-owned businesses, on average;

* The gap between the amounts of business finance sought and the amounts agreed is significantly greater for Black African and Pakistani-owned businesses;

* Black African and Black Caribbean-owned businesses are much more likely than Indian, Pakistani and White-owned businesses, to be rejected for loans outright;

* Black African and Black Caribbean owned businesses are significantly more likely to feel discouraged from applying for finance than Indian, Pakistani and White-owned businesses;

The survey found that many of these discrepancies can be explained by standard business risk factors and financial relationships (for example, the age of businesses and how much collateral businesses can offer against a loan, as well their financial track records). However, it concludes that these do not fully explain the differences, particularly with regard to the margins paid on loans, and gaps in financing.

Minister for Industry and Regions Margaret Hodge said: "Why is it harder and costlier for some ethnic minority firms to get a loan than others? I have asked the Task Force to investigate this and come back with recommendations on ways to address this issue.

"Over the next two years the new Task Force will propose ways to encourage more ethnic minority participation in enterprise. It will also reach out to potential entrepreneurs in under-represented BME groups, including ethnic minority women, looking to help remove the barriers to doing business which face them."

Adeeba Malik MBE, Deputy CEO at QED - UK, will chair the Task Force , and Tom Riordan, Chief Executive at Yorkshire Regional Development Agency Yorkshire Forward with be deputy.

There are an estimated 300,000 BME-run small businesses in the UK, contributing an estimated £20 billion per year to the UK economy. However, some BME groups are under-represented in enterprise including black Africans, black Caribbeans and Bangladeshis, while there are relatively few women in business in all groups.

The Taskforce Chair and Deputy Chair will announce further details about the membership and projected work of the Task Force in the autumn.

Click here to download a copy of tThe survey, 'Finance For Small And Medium-Sized Enterprises: Comparisons of Ethnic Minority And White-Owned Businesses' (2.6MB, )