T. Bates, UNEQUAL ACCESS - FINANCIAL INSTITUTION LENDING TO BLACK-OWNED AND WHITE-OWNED SMALL BUSINESS START-UPS, Journal of urban affairs, 19(4), 1997, pp. 487-495
This article analyzes financial institution lending to small business
start-ups. Relative to the white-owned firms, black-business start-lip
s are observed to be poorly capitalized, and they are more likely to h
ave discontinued operations over time. Black-owned businesses receive
smaller loans than white-owned firms with identical measured character
istics. The black-firm borrowers, furthermore, rely more heavily upon
forms of consumer credit-especially credit cards-than whites. Past stu
dies 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.