This study explores how the ethnicity of small business owners affects the influences of family ownership on their willingness to borrow. While the willingness issue is fundamental in the literature on small business debt financing, it has been understudied. We introduce an indirect measure of the willingness to borrow by taking into consideration the demand constraints of borrowers. Empirical findings indicate that family-owned businesses borrow less than non-family-owned ones only when they are owned by non-visible minorities. This phenomenon is not observed among visible-minority-owned firms, and we interpret this difference between ethnic groups using the availability of social capital.