Over generations, organizations such as large banks have aided in implementing structural racism by codifying racist individual views into laws that affect a large number of people. For example, you may have read about banks' practice of "redlining" specific communities to keep out Black, Indigenous, and people of color.

The Federal Reserve released data showing nearly twice as many black-owned businesses were denied loans as white-owned ones in the US. According to the research, black-owned companies were the most likely to apply for bank financing, but just 47% of these applications were adequately funded. Moreover, by more than 10 percent, black business owners fail to acquire complete funding even if they are authorized for a loan.

There's more bad news to come. According to the study, a credit card application from a black-owned business was turned down at the most significant rate. In addition, the percentage of black- and Hispanic-owned enterprises that received loans of $100,000 or more was lower than that of other ethnic groups who asked for bank funding.

Is this a form of prejudice?

Even if African American-owned enterprises have increased by 400 percent, more funding is required.

Absolutely. When asked by NPR's St. Louis Public Radio about the struggles of St. Louis' seemingly provincial lending, senior loan counselor Galen Gondolfi said, "St. Louis's seemingly provincial lending struggles not only with entrepreneurs that don't historically "look like them," but [also] the types of businesses that are unique to these populations."

Discrimination, though, isn't the only factor at play here. A black business owner's race isn't the only aspect that banks consider when deciding whether or not to lend them money.

One of the Federal Reserve Bank of Kansas City's community development advisers, Dell Gines, argues that the lack of intergenerational wealth and "insufficient awareness" of the banking system is a significant hurdle. Assuming that banking discrimination is non-existent, "we would still undoubtedly have disparate outcomes because the system itself hasn't equipped us to utilize the financial system successfully," says Gines, a black man. After that, when you add in what research has shown to be high discriminating levels, it's easy to understand why there are such wide variations in outcomes.

Another factor at play is one's level of confidence or lack thereof. According to a Federal Reserve survey, one out of every four black-owned businesses has avoided seeking loans because they don't want to build up debt, and more than half of those businesses believe they would be rejected if they did.

Although the percentage of black-owned firms has increased over the previous decade, it is still more difficult for these businesses to secure funding. What's the solution? There's no one-size-fits-all answer to this problem. There is much room for improvement, however.

However, data does not lie. It's more challenging to obtain a loan if you're a minority, mainly if your business is black-owned. Racism and discrimination are facts, even if some individuals refuse to acknowledge them, and attitudes will not alter overnight. The way to overcome these impediments is through education, and the good news is that resources are accessible to assist small business owners in obtaining that knowledge and much-needed capital for their businesses.

About Jim Woods

Overview

Jim Woods is the President and CEO of Woods Kovalova Group's Denver, London, and Kyiv offices and head of the Diversity, Equity & Inclusion Practice. He works exclusively in the banking sector with senior executives and leadership teams to create a significant and sustainable impact in DE&I to create the kind of inclusive environment that allows companies to attract, retain, and get the best out of their employees and serve their communities. Better.

Experience

Jim has more than two decades of experience driving change in the banking industry around performance, growth, and innovation. He's designed and led complex transformation initiatives in companies linked to globalization, demographic changes, sustainability, shifting business models, and new technologies.

Earlier in his career, Jim served in the United States Navy, taught fifth-grade math and science, including university human resources and leadership. Also, Jim has taught at Villanova University. He has authored six business books on DE&I, and leadership.

Education

Capella University, MS in Organizational Development and Human Resources