A Pew Research study released last week offers new data supporting the notion that minorities are deeply skeptical of lending practices in America. The data is troubling, but not exactly surprising. We’ve known about the problems in lending, particularly as it relates to minority businesses, for years.
The question is how are we going to…
- Fix the systemic racial gaps in the lending industry
- Rebuild trust with the most critical growth sector in our economy: minority business owners
Black Americans remain wary of their treatment by banks
The study confirms that a wide gap exists between white and black people’s perception of fairness in the banking industry, and that black skepticism of fair lending is widespread.
Only 1 of every 4 white Americans believes that blacks receive unfair treatment when applying for a loan or mortgage, but black people themselves feel very differently. Exactly 2 out of every 3 black Americans feel that they are treated less fairly when applying for a loan or mortgage.
In a time of social unrest, now is the time to address the banking issue
In 2016 there has obviously been a lot of dialogue and headline news around the #BlackLivesMatter movement. Black Americans’ are placing a spotlight on their strained relationships with law enforcement and the criminal justice system, not to mention popular culture — everything from diverse representation at the Academy Awards to Comic Con have been cited.
But I’m seeing a shift happening in the corporate world, too. Right now there is more widespread awareness and emphasis being placed on diversity, inclusion, and identifying unconscious bias in the workplace, especially among Fortune 500 companies. This is good news for our increasingly diverse U.S. population, and it suggests that this might be a good time to push the issue forward.
Our economic future depends on minority access to capital
We’ve just survived one of the most difficult economic stretches in our country’s history, and minority owned businesses emerged during the Great Recession as our “secret weapon” in rebuilding the economy. Minority businesses outpaced majority-owned businesses by adding 72.3% of the new jobs during that time. And there’s still plenty of further growth opportunity available from these demographics.
According to the Center for Global Policy Solutions:
If the number of people-of-color firms were proportional to their distribution in the labor force, people of color would own 1.1 million more businesses with employees. These firms would add about 9 million jobs and about $300 billion in workers’ income to the U.S. economy.
As staggering as this potential seems, our growth will be limited until we do something to improve the minority access to capital issue in this country. For new entrepreneurs and existing businesses alike, our ability to grow the economy depends on the banks’ abilities to serve the needs of an increasingly diverse population.