Dependable business lending — or access to capital — is essential to the growth of businesses.
And yet Black businesses track behind white ones in terms of access to business loans to help launch their operation; the Small Business Administration Office of Advocacy stated in a 2018 report, based on a 2014 Census survey, that just 15.2% of Black business owners relied on this source of financing.
The same survey found that more than a quarter of Black businesses don’t apply for business loans and, of those, nearly 60% said they did so because they thought they’d be turned down.
This lack of investment by lenders in Black businesses has wide revenue implications. According to a September 2020 Citi report, providing fair and equitable lending to Black entrepreneurs over the past 20 years might have resulted in the creation of an additional $13 trillion in business revenue and potentially created 6.1 million jobs per year.
Today, efforts to improve lending to Black-owned businesses are trending in the same direction as venture capital firms targeting new tech-enabled Black startups. By making lending and funding more accessible, business growth for Black businesses could create new wealth opportunities.