Executive Summary​

​2020-2025 | Exploring MDI Communities and Small Business Sales Activity

​

The U.S. economy is powered by small businesses. According to the Chamber of Commerce, small businesses employ nearly half of all workers and account for nearly half of the Gross Domestic Product (GDP). 

​​​

Minority Depository Institutions (MDIs) are mission-driven lenders that locate in and lend to underserved communities. Recent research from the National Bankers Association Foundation shows that MDIs originate a greater share of small business loans (SBA 7a program) to minority and lower-income communities relative to other SBA lenders. MDIs are often especially important institutions for closing capital gaps faced by minority entrepreneurs. 

​

In this report, we use data from Fiserv’s Small Business Index to examine small business activity in communities with MDI branches. Fiserv proprietary data on billions of point-of-sale transactions made each month at small businesses nationwide is aggregated into a monthly index figure that indicates whether sales are up or down compared to a 2019 baseline.  The Small Business Index also tracks transaction growth (a proxy for foot traffic) and sectoral trends.1

​

Using this dataset, we examine small business activity at three levels of geography:

• MDI communities — The zip codes served by an MDI branch.2 

• MDI local markets — the metropolitan market that each MDI zip code sits within that serves as its relevant local economy.3

• The overall nation — the aggregate U.S. small business benchmark.

​

Our analysis shows that most MDIs have recovered and are even leading relative to their local markets. But the MDI communities hit hardest by the pandemic are also the ones most likely to still be struggling, which underscores the importance of local-based interventions. Ultimately, we believe that every community deserves the chance to build up its small business ecosystem. And we encourage other community lenders, nonprofits, and community-based organizations to explore how they can leverage datasets such as the Fiserv Small Business Index to further identify neighborhoods that can benefit from targeted assistance and capital.

​

Footnotes:

1 All sales, transaction, and average ticket data is indexed to a 2019 baseline (pre-pandemic = 100), so every figure reads as a recovery relative to each area’s own starting point. Throughout the report, the median is used to represent the “typical” community to lessen impact of any outliers in the data.

2 This represents 83% of all MDI branch zip codes: the remaining 100 zip codes were dropped due to limited available sales data.

3 For local markets, this report uses Core Based Statistical Areas (CBSAs) which are geographic units covering metropolitan and micropolitan areas with populations of at least 10,000 people. An example of a CBSA in this dataset is “New York, Newark, Jersey City.” Read more about how CBSAs are defined and constructed here: Core Based Statistical Areas | Congress.gov | Library of Congress

​