Unequal access: Financial institution lending to black- and white-owned small business start-ups

This article analyzes financial institution lending to small business start-ups. Relative to the white-owned firms, black-business start-lips are observed to be poorly capitalized, and they are more likely to have discontinued operations over time. Black-owned businesses receive smaller loans than white-owned firms with identical measured characteristics. The black-firm borrowers, furthermore, rely more heavily upon forms of consumer credit-especially credit cards-than whites. Past studies have implicated banks for their unequal treatment of black firms. Findings of this study indicate that such unequal treatment continues to handicap black-owned businesses.