Unequal Qccess: Financial Institution Lending to Black-and White-Owned Small Business Start-Ups

:This article analyzes financial institution lending to small business startups. Relative to the white-owned firms, black-business start-ups 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.