COSTA MESA, Calif.—A new analysis shows that Republicans make up the largest percentage of U.S. small business owners, and that they have the highest average business loan balances and lowest delinquency rates.
With the presidential election less than a year away, Experian looked at the financial and demographic characteristics of small business owners by political affiliation. The report found that approximately 35% of all small business owners identify as Republican, while 29.4% identify as Democrat and 15.8% identify as Independent.
“Small businesses are a major area of interest for a number of political campaigns — and justifiably so, given their positive impact on employment rates and importance to local economies,” said Pete Bolin, director of consulting and analytics for Experian business information services. “Gaining insight into the characteristics of specific segments of the small business owner population enables government officials, lenders and business professionals to better understand them and take appropriate action to help these small firms grow.”
As part of the analysis, Experian examined the credit and payment behavior of small business owners who identify as Republican, Democrat or Independent. Findings show that those who identify as Republican have the highest average business loan balances and the second-highest consumer loan balances at $9,823 and $193,483, respectively. Meanwhile, Democrats have the lowest average business ($7,540) and consumer ($172,653) loan balances. Furthermore, Republican small-business owners demonstrated good payment behavior, with the lowest delinquency rates (91-plus days) for commercial and consumer credit cards at 0.98% and 5.8%, respectively. They were followed by Independents and Democrats.
“Understanding how to establish and build commercial credit is an integral component of a small business’s success,” said Bolin. “We always recommend that business owners separate their personal credit from their business credit to protect themselves in case one falters due to unforeseen circumstances. As we review the analysis, Republicans have demonstrated a successful ability not only to leverage their business credit for business purposes, but also to pay their bills in a timely manner.”
While the percentage of small business owners who identify as Republican is far greater than those who identify as Independent, there are a number of similarities between the two parties, Experian said. The difference in average personal income between Republican and Independent small business owners is less than $100. On average, Republican small business owners make $97,481, while Independents make $97,386. On the other end of the political spectrum, the average personal income for Democrats is $86,574.