UNEQUAL ACCESS - FINANCIAL INSTITUTION LENDING TO BLACK-OWNED AND WHITE-OWNED SMALL BUSINESS START-UPS

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.