A new LendingTree analysis reveals that America’s promise of opportunity remains unevenly distributed. 

In 2024, 39% of Black-owned businesses were denied a loan, line of credit or merchant cash advance, the highest rejection rate of any racial or ethnic group. Hispanic-owned businesses followed at 29%, while just 18% of white-owned businesses faced denial.

The overall numbers may appear steady, but they mask deep disparities. 

“Navy Federal Credit Union data revealed they denied African American home loan applications at a rate of 52%, Latino home loan applications at a rate of 44%, and white applicants at a rate of just 23%,” attorney Ben Crump wrote on X in February 2024. “We will continue to fight for those affected by this disparity in lending!”

Nationally, 21% of businesses that applied for financing in 2024 were denied, nearly unchanged from 22% in 2023. 

However, the burden was not shared equally. 

Small firms, startups, and minority-owned companies carried the heaviest weight. Firms with one to four employees were denied 26% of the time, five times the rate of larger firms. Businesses operating between three and five years, often the make-or-break stage for entrepreneurs, faced the highest rejection rate at 29%.

The type of loan also shaped the outcome. 

Applicants for Small Business Administration loans or lines of credit were turned away nearly half the time, with 45% denied in 2024. Personal loans, often used by entrepreneurs who cannot access business credit, carried a denial rate of 38%. Traditional business loans were denied 32% of the time. 

These figures place a spotlight on how financial institutions view smaller, less established, and minority-owned firms as riskier bets, regardless of their potential to contribute to local economies.

Washington, D.C., shows how these national trends play out on the ground. 

The District is home to 82,666 small businesses, accounting for 98.2% of all firms and employing nearly half of the city’s workforce. 

These businesses added more than 43,000 jobs in a single year, proof of their vitality and importance to the local economy. Yet access to capital has not matched their contributions.

Black entrepreneurs own nearly 29,500 businesses in the city, while Hispanic entrepreneurs own close to 7,000. These firms are central to neighborhood vitality, cultural expression and job creation. Still, they are often blocked from the financing needed to sustain and grow. 

In 2023, banks issued only $153.3 million in loans to District firms with revenues under $1 million, according to the Small Business Administration. Lending through small-dollar loans of $100,000 or less totaled $235.1 million. For a city with thousands of minority-owned businesses and persistent economic gaps between communities, those figures represent a deep shortfall.

Institutional practices add to the divide. Community development financial institutions, created to serve underserved populations, rejected 34% of applicants nationally. Large banks followed at 31%, and even credit unions turned away more than a quarter of those who applied. For minority-owned businesses in Washington, these numbers show the constant struggle with paperwork, credit requirements, and structural bias that too often leave them without resources.

The impact extends beyond the businesses themselves. When minority-owned firms are denied access to financing, employees lose jobs, neighborhoods lose services, and families lose opportunities to build wealth. In a city with one of the nation’s highest living costs, every loan denied can mean another business shuttered, another household destabilized and another community weakened.

Matt Schulz, LendingTree’s chief consumer finance analyst, said the lending environment shows no signs of easing. 

“Inflation, tariffs, high interest rates and a slow job market are making things tough on small businesses and the customers they’re trying to attract,” he said. “[With] this uncertainty, banks pull back, as they tend to do in risky, unpredictable times. Standards for lending to consumers and businesses have generally been tight for some time, and that’s unlikely to change soon.”

This article originally appeared here.

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