Banking & Lending Inequities For Black Entrepreneurs 

Jayla Hill 

For decades, Black entrepreneurs have been at the forefront of innovation, culture, and community development. Yet when it comes to accessing capital, the very lifeblood of business growth, systemic barriers continue to stall progress. 

Black business owners are significantly less likely to receive funding from traditional financial institutions than their white counterparts. According to the Federal Reserve, Black entrepreneurs are twice as likely to be denied loans and are more often offered less favorable terms, including higher interest rates and shorter repayment windows, even when they have a good credit standing. As a result, you may ask, many are forced to rely on personal savings, credit cards, or high-risk lending alternatives. This increases Black entrepreneurs going into major debt and burnout. 

Historically, there has been adverse banking discrimination that has stripped Black communities of generational wealth and trust in the financial system. These injustices still cast a shadow on Black entrepreneurs. Even today, only 1% of venture capital funding goes to Black founders.  Policymakers can also play a role by increasing support for minority owned businesses through grants, forgivable loans, and financial literacy initiatives that don’t just teach, they empower. 

While traditional banks often fall short, Black entrepreneurs are turning to community development financial institutions, credit unions, and investors for support. The National Association of Black Owned Broadcasters (NABOB) and Black owned banks such as OneUnited Bank are working to bridge the access gap by offering culturally responsive financing solutions. Additionally, crowdfunding, peer-to-peer lending, and capital collectives are gaining traction. Closing the racial lending gap isn’t just a moral imperative; it is an economic one. According to McKinsey & Company, narrowing the racial wealth gap could grow the economy by 1-1.5 trillion over the next decades. To get there, banks must commit to equity audits and have partnerships with Black- led organizations.