Last year, almost half of Black business owners said they had trouble getting capital. In 2021, the approval rate for private loans to white business owners was more than twice what it was for Latino business owners. Women are much more likely than men to finance their businesses than credit cards. Muslim entrepreneurs rarely seek business loans at all because Sharia law forbids paying interest. These are just some of the many inequities in small business lending that women and Black and Brown business owners of color routinely face.
In 2020, ILSR partnered with Recast City to help 120 of the revolving loan funds (RLFs) supported by the US Economic Development Administration boost their effectiveness in reaching and making loans to businesses from historically excluded communities. Through a three-month series of cohort discussions and training programs, RLF staff and board members explored the differences in equal access to lending and equitable lending; building enduring connections with businesses from underserved communities; and buffering perceived lending risks, among other things. In Nonprofit Quarterly, ILSR Senior Researcher Kennedy Smith describes the Equitable Lending Leaders program and some of its biggest lessons.
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