Asian American Pacific Island (AAPI): Lending Trends & Financial Inclusion

May is Asian American Pacific Island (AAPI) Heritage month, which celebrates two important milestones in Asian/Pacific American history. First, the arrival of the initial Japanese immigrants in the United States (May 7, 1843) and second, the completion of the transcontinental railroad on May 10, 1869, with the majority of workers who laid the tracks being Chinese immigrants.

While economists and historians have written about the Asian American and Pacific American experience, particularly as it relates to diaspora and immigration; this article, will focus on the current AAPI small business owner. Specifically, financial inclusion for these ethnic groups within U.S. small business.

Photographer: JESHOOTS.COM | Source: Unsplash

AAPI: Who is included?

As a member of the National Minority Supplier Development Council, Loan Mantra has a clear vision for minority lending and impact. With a majority of its client base identifying as Southeast Asian, South Asian or Asian American, Loan Mantra understands and helps MBEs (minority business enterprises).

Determining impact begins with understanding the cultural landscape at-large. First, it’s important to note how the AAPI designation is a problematic one. The category generalizes many racial, ethnic, geographical, and political identities and subsets into a single classification. In fact, the AAPI designation includes more than 26 different countries.

For our purposes, we will rely on U.S. Census definitions of “Asian American” to include persons having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent. “Native Hawaiian and Other Pacific Islander” includes Native Hawaiian, Samoan, Guamanian or Chamorro, Fijian, Tongan, or Marshallese peoples and encompasses the people within the United States jurisdictions of Melanesia, Micronesia and Polynesia.

The number of individuals identifying as AAPI in the U.S. in 2020 from the U.S. Economic Policy Institute. More than 26 countries are represented in the AAPI designation.

Financial Overview

Despite the challenges with aggregating the data, let’s start with key takeaways for AAPI small business owners.

In 2022, annual revenue for MBEs increased in the following ways:

  • Asian Pacific revenue totaled $94.4 billion, a 34.9% increase from 2021.
  • Asian Indian revenue totaled $71 billion, a 20.3% increase from 2021.

In recent years the average AAPI income was 38% higher than Americans overall. Unfortunately, this collective number presents only a small part of the overall story, failing to examine the wealth disparity between AAPI subgroups. The gap between earners is staggering: top 10% of earners generate 10.7x the income of the bottom 10%.

A Pew research study provides another way to view the stark differences. Consider the median net worth for these U.S. households, all of which identify as AAPI:

  • Japanese American: $592,000
  • Indian American: $460,000
  • Vietnamese American $61,500
  • Korean American $23,400

What causes wealth disparity between AAPI subgroups?

What is at the heart of this divide? Again, more than 26 countries are represented in the categorization. Consider these four hurdles to the minority small business owner.

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Photographer: Joshua Tsu | Source: Unsplash

Immigration History

Different AAPI subgroups immigrated to the U.S. in different waves, under different circumstances, and encountered different barriers and opportunities once arriving in the U.S. For instance, Chinese immigrants in the 1800s accounted for a large workforce on the railroad, whereas most first generation Asian Americans now immigrate for higher-paying tech opportunities. The diversity of origins and experiences contribute to the stark economic divide between AAPI communities.

Language Barriers

Immigrant communities face challenges distinct from their US-born counterparts, with the majority of Asian Americans (5.7 in 10) born abroad. According to Pew Research, nearly all US-born Asian Americans speak English, but 40% of foreign-born Asian Americans have limited English proficiency (LEP). Studies show working age LEP adults earn 25-40% less than their English-speaking counterparts.


A 2019 Pew Research study found Asian Americans were less likely to live in poverty than Americans overall (10% vs 13%). With 19 subgroups studied, however, 12 had poverty rates as high or higher than the US average. As it relates to financial health, the problem with aggregating data for AAPI groups results in withheld or fewer resources given to lower-income AAPI communities.

Urbanite, high-earning AAPI workers cause an imbalance in the data. For instance, with over 4.5 million Indian Americans in the U.S., only 6% live at or below the poverty line. In comparison, 25% of 270,000 Mongolian Americans live at or below the poverty line.


Median earnings increase with higher rates of education. While AAPI individuals are more likely to obtain a bachelor's degree- 53% vs. 33% of all Americans-this educational privilege is not equally true for all AAPI subsets. Nearly 75% of Indian Americans have college degrees, compared to 1 in 10 Bhutanese Americans.

a woman showing a woman something on the laptop
Photographer: Centre for Ageing Better | Source: Unsplash

Asian American: Financial Inclusion

Despite the problems with the collective data, we can find some general takeaways about the AAPI workforce within the small business community. This information helps us better integrate Asian Americans and Pacific Americans into the overall financial system.

The AAPI workforce faces these three barriers:

Discrimination in hiring and promotion

The “model minority” narrative can be a challenge for any Asian American worker: specifically, Asian Americans are portrayed as educated, hard-working and successful. This is disruptive for workers who are overlooked for promotion or left out of important discussions regarding discrimination.

A Gallup poll reported that 30% of AAPI workers experienced employment discrimination, the largest of any group surveyed. Still, they only accounted for only 2-3% of employment discrimination complaints filed. This is not only a problem for U.S. areas where AAPI workers are the minority. In fact, employment discrimination against native Hawaiians, living on the islands, is also well documented.

Equally problematic is the lack of AAPI executives in upper-level management positions. One study found Asian Americans to be the racial group most likely hired for high-tech jobs, but least likely to be promoted into leadership within those sectors. Another study discovered that AAPI are the least likely group to be promoted into management, less than half as likely as their white coworkers. A Forbes study details the perils of “talent blindness.” That is: less inclusive leaders, or even investors, are unable to recognize their employees’ unique strengths and values, passing them up for opportunities or capital.

Multigenerational households equals less disposable income

In 2016, a Prudential Research report found that Asian Americans provide financial support to relatives at three times the national average (20% vs 6%). 1 in 10 send money to family members abroad at least once a month, averaging $400 each money transfer. Analysts indicate that current numbers are likely higher. Plus, with more than a quarter of Asian Americans living in multigenerational households and others offering financial support to family members abroad, AAPI workers have less disposable income or ability to build their financial security. They have accounted for each dollar.

COVID-19 pandemic impacts on AAPI

AAPI are also more likely to own a small business (1 in 6 adults compared to 1 in 8.4 nationwide) in sectors hardest hit by the pandemic: accommodations, food services, and retail. Asian Americans, in particular, were economically disturbed by the uptick in discrimination and hate crimes during the pandemic. AAPI business owners are still recovering from this combination of social and physical challenges.

woman in purple jacket sitting on mans lap
Photographer: Yusron El Jihan | Source: Unsplash

So what?

Understanding the wealth gap within the AAPI community starts with addressing how different subsets should be better represented and resourced. It means determining borrower needs not only based on origin and experience, but also by using collective data to eliminate AAPI hiring discrimination, employment biases, and executive imbalance.

Here are three ways to support AAPI small business owners:

Financial Literacy: Finance is inherently personal, and its no different for a business owner who is creating wealth and building a family legacy through their small business. AAPI borrowers should seek financial partners who genuinely understand their unique motivations and challenges, including living and working in multigenerational households.

Credit Building: According to the Asian American Real Estate Association (AAREA), some AAPI borrowers are are debt-averse. While this is a healthy financial practice, it can leave borrowers underbanked, or with “thin” credit files. AAPI borrowers can access alternative lenders to help them build their credit and portfolios, while still valuing the borrowers’ attitudes about debt.

Financial Resources: AAPI borrowers should seek financial partners who speak their language, literally and financially. The first step to inclusion is working with partners who want to include you and advocate for your needs and concerns. Vet financial partners and lenders by learning more about their mission and portfolio.

Loan Mantra

Small business owners identify two obstacles to their success: access to capital and financial education. Loan Mantra removes these hurdles so business owners can spend more time actually building their business. Whether you need a commercial loan or expert advice, we provide corporate-size services to business owners of all sizes.

As a minority-owned business, Loan Mantra understands the challenges facing underserved borrowers. We speak English, Spanish, Hindi, Bengal and all the industry lingos but we share one mantra: To improve the future of human entrepreneurship through best-in-class technology, financial literacy, and commitment to equitable market access. Reach out to any of our friendly, responsive and qualified experts at today.