Lending Plummets For Black Businesses
In spite of the fact that the majority of Washington, D.C.’s residents are black, they are in the minority when it comes to statistics on small business loans in the area. The Washington Business Journal reports that lending to small black-owned businesses in Washington fell 85 percent between 2007 and 2010 — that is 518 loans to 69 loans. The lending is on track to fall another 10 percent in the current fiscal year. Loans to other groups, however, are booming.
Small Business Administration (SBA) loans are supposed to be set up to make it easier them to lend to businesses that may not otherwise qualify, one reason presumably being the lack of funds people of color may have access to compared to their historically advantaged white counterparts. This seems to be the exact reason why more blacks should qualify and receive the loans, but cents doesn’t always make sense.
The Washington Business Journal purports that the lack of funding suggests a significant part of the economy has not participated in the recovery — significant meaning one in six local companies in the Washington, D.C. area in particular may be forced to shut down if lending doesn’t start reaching the black-owned businesses in the Chocolate City.
Not only are the businesses suffering, so are the home values that are often tied to the wealth needed to launch and maintain a small business.