Business News
Blacks least likely to Get Business loan from Banks
By Freddie Allen
Senior Washington
Correspondent
WASHINGTON (NNPA)
– Black-owned businesses
face tougher challenges than
other groups when seeking
bank loans, according to a
new study by the Gallup
polling company commis-
sioned by Wells Fargo.
Nearly half (47 percent)
of Black-owned businesses
operate in the South and the
study found that 77 percent
of Black business owners
or sexual orientation had
impacted their chances to
obtain credit for their busi-
ness,” stated the report.
“Among those who indicat-
ed they needed credit,
African American owners,
in particular, say they were
not able to get all the credit
they needed.”
According to the report,
13 percent of Black busi-
ness owners obtained the
credit they needed, com-
pared to 20 percent for
Hispanic owners, 24 percent
of Asian owners and 23 per-
$250,000; 17 percent of
Blacks seeking a loan less
than $50,000 were rejected.
By comparison, 33 percent
of Asian owners were
turned down for larger loans
and 14 percent for smaller
ones. For Latino business
owners, the rejection rate
was 26 percent for large
loans, and 15 percent for
smaller ones.
Once banks declined a
loan to Black business own-
ers, they needed they were
more likely to apply for
credit again than other small
Nearly half (47 percent) of Black-owned
businesses operate in the South, and 77 percent
of Black business owners use personal cash to
finance their businesses
use personal cash to finance
their businesses.
African-American busi-
ness owners were less likely
to borrow money for busi-
ness reasons than Asian and
Hispanic business owners.
“Twenty-two percent of
African American business
owners say they felt that
discrimination from a finan-
cial institution based on
their race, ethnicity, gender
cent of owners in general.
The report also found that
the larger the loan request,
the higher the rejection rate.
Overall, 27 percent of appli-
cations for larger loans were
turned down and only 7 per-
cent for smaller ones.
The highest rejection rate
– 38 percent – was among
Black business owners
seeking a loan of at least
business owners.
In a statement, Lisa
Stevens, the head of Small
Business for Wells Fargo,
said that serving diverse
communities has long been
a focus area and priority.
“For this reason, we com-
missioned the Gallup study,
which gave us new insight
into the perceptions and
experiences of diverse busi-
ness owners working with
banks, and how we can
improve as a company and
as an industry,” said
Stevens.
In an interview, Ron
Busby, president of the U.S.
Black Chambers, Inc., said
there is some good news
amid the bad.
“If we’re being successful
with the limited amount of
resources that we have
today, our future looks won-
derful,” said Busby. “I think
for Black businesses to be
successful, they need to go
in proactively. They need to
have established relation-
ships with their bankers
early on before there’s an
opportunity.”
Busby continued: “When
they’re first thinking about
starting a business, they
need to start a relationship
with their banker.”
In an effort to address
some of the challenges
affecting minority business
owners related to the lend-
ing industry, Wells Fargo
committed to a four-point
plan that includes more edu-
cation and credit coaching
for borrowers and $75 mil-
lion
in
grants
and
investments in micro-lend-
Ron Busby, president of the
u.S. Black Chambers, Inc.
ing programs aimed at
diverse business communi-
ties.
“We know that in order to
address the range of finan-
cial needs within all of our
communities, we need to
support and work with the
ecosystem of organizations
that serve small business-
es,” said Jon Campbell,
executive vice president,
government and community
relations for Wells Fargo,
said in a statement.
“Through this increased
investment and connections
with community lending
organizations, we are mak-
ing meaningful strides
toward increasing access to
capital for small businesses,
as well as helping more
business owners get the
coaching and educational
resources they need to suc-
ceed financially long-term.”
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