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“Corporate redlining” has cost Black neighborhoods millions

Monitoring Desk

WASHINGTON: The number of SBA loans to Black-owned businesses has decreased 84% from its peak before the 2008 financial crisis, according to a new report from the Business Journals, citing lending data from the agency’s flagship 7(a) program. Overall 7(a) loans declined 53% during that time.

The precipitous decline in loans to Black-owned businesses, in particular, was despite 48% growth in the economy, a 101% increase in bank deposits and an 82% jump in commercial loans, the report notes.

“White neighborhoods receive roughly twice as much per person in small-business loans compared with Black neighborhoods,” the data show.

“Likewise, majority-white neighborhoods, on average, receive roughly twice as many small-business loans per capita.”

The country’s four largest banks — Citi, Bank of America, JPMorgan and Wells Fargo — which hold roughly 35% of the nation’s deposits, made 91% fewer 7(a) loans to Black-owned businesses in 2019 than in 2007.

Since banks are prohibited from collecting data on the race and ethnicity of borrowers, the reporters interviewed Black business owners in each of the company’s 44 markets and conducted a demographic analysis of small-business lending using census tracts.

Experts say the data underscore the way bank and government policy have exacerbated racial disparities in wealth generation, homeownership rates, educational attainment and other measures of financial equality.

Economists at Citigroup recently found that anti-Black racism had cost the economy $16 trillion since 2000.

“I don’t think most Americans understand the severity of the problem,” Orv Kimbrough, CEO of Midwest BankCentre, said in the report.

“I call it corporate redlining.”

Courtesy: (Axios)

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