Based on a calculated analysis by Creative Investment Research, the SBA’s 7(a) Loan Program, the agency’s main and most common lending program, is projected to lend Black firms and businesses $1 billion this year, a whopping jump from $599 million in 2017.
The Washington, D.C.-based firm figured 7.76% of SBA loans were issued to Black business owners from October 2022 through mid-June 2023, versus 3.86% in 2017. It reports the percentage of loan dollars to Black entrepreneurs in that time frame rose to 4.41% from 2.36%.
A groundbreaking new study reveals a remarkable increase in SBA 7(a) loans, both in count and total value, to Black or African American entrepreneurs from 2017 to 2023. The data underlines significant strides in fostering greater small business lending equity. We predict 7(a) lending to African American firms will reach $1 billion in 2023, up from $599 million in 2017.
The National Football League (NFL) recently announced its plans to secure a loan worth $78 million from 16 Minority Depository Institutions (MDIs), Community Development Financial Institutions (CDFIs), and banks focused on minorities and women. This move is a small step in line with the League’s ongoing efforts to enhance business opportunities with diverse enterprises. The NFL is borrowing from the following banks:
Adelphi Bank – Columbus, OH (MDI, Black or African American owned)
Agility Bank, N.A. – Houston, TX (MDI, Women-owned and led)
Asian Bank – Philadelphia, PA (MDI and CDFI, Asian or Pacific Islander American owned)
Central Bank of Kansas City – Kansas City, MO (CDFI)
Citizens Savings Bank and Trust Company – Nashville, TN (MDI and CDFI, Black or African American owned)
Citizens Trust Bank – Atlanta, GA (MDI and CDFI, Black or African American owned)
City First Bank, National Association – Washington D.C. (MDI and CDFI, Board is majority African American)
First Independence Bank – Detroit, MI (MDI and CDFI, Black or African American owned)
FWBank, an Illinois Banking Institution – Chicago, IL (Women-owned, women-led and women-focused)
Industrial Bank – Washington D.C. (MDI and CDFI, Black or African American owned)
Mechanics and Farmers Bank – Durham, NC (MDI and CDFI, Black or African American owned)
Optus Bank – Columbia, SC (MDI and CDFI, Black or African American owned)
Ponce Bank – The Bronx, NY (MDI and CDFI, Board majority is Hispanic American)
Southern Bancorp Bank – Arkadelphia, AR (CDFI)
Texas National Bank – Mercedes, TX (MDI and CDFI, Hispanic American owned)
Unity National Bank of Houston – Houston, TX (MDI, Black or African American owned)
“After the initial excitement around the corporate pledges, they basically have petered out,” CIR chief executive William Michael Cunningham told Financial Times. “They haven’t really done anything that would lead one to believe that they are committed, with some exceptions.”
The Asia-Pacific Economic Cooperation (APEC) Transportation Ministerial Meeting: Minority Bank EV Financing Roundtable took place in Detroit on May 15, 2023, and brought together industry leaders, government officials, and experts to discuss financing electric vehicle infrastructure development.
The event was organized by the Asia-Pacific Economic Cooperation (APEC) to be a platform to address key challenges and opportunities in the transportation sector. The meeting laid the foundation for continued cooperation among APEC economies and played a crucial role in advancing this year’s APEC theme of “Creating a Resilient and Sustainable Future for All.”
Offering a potentially stormy outlook, Black Americans could face an economic loss totaling a whopping $132 billion if the U.S. government goes into default for a protracted period.
According to an analysis from Creative Investment Research, the largest financial blow for Black Americans could come from the nation’s housing market totaling $60.9 billion. The findings are from the firm’s Projected Impact of Federal Government Default on Black Americans: Dire Report.
The latest employment data released by the Labor Department on Friday, May 5, shows the U.S. job market growing at a strong pace. Employers added 253,000 jobs in April on a seasonally adjusted basis. The overall unemployment rate also decreased to 3.4 percent, down from 3.5 percent in March, matching the lowest since 1969.
Black unemployment hit a historic low. The unemployment rate for Black workers fell to 4.7 percent in April, the lowest on record since the Labor Department began collecting Black unemployment data in 1972. This is a significant achievement for the Black community, which has historically faced much higher levels of unemployment relative to other ethnic groups.
The unemployment data creates challenges for the Federal Reserve, complicating monetary policy and the potential pause in interest rate increases. The strong labor market could lead to an increase in wages and inflation, making it more difficult to reach current monetary policy goals.
Another challenge is the increasing concentration of market share among the largest banks resulting from the closure and sale of several sizeable institutions. This has adverse effects on society by reducing competition, stifling innovation, and potentially leading to redlining, higher fees, and less favorable lending terms. Additionally, a highly concentrated banking system hinders the effective transmission of monetary policy and slows down the implementation of changes to interest rates, another impediment to the Fed’s efforts to control inflation.
Despite these challenges, the latest employment data is a positive sign for the U.S. economy. The strong labor market and historic low unemployment rates for Black and Hispanic workers are a testament to the resilience of the American workforce. As the economy continues to improve, policymakers will need to find ways to balance the growth with inflation control and maintain a healthy and competitive banking system.
The impact of regional bank troubles on Black people will likely be multifaceted, since this is a group with a higher proportion of underbanked and unbanked individuals. Some potential consequences include:
Reduced access to banking services: If regional banks close or consolidate, it may lead to a reduction in the number of bank branches in communities with a high proportion of Black residents. This could make it more difficult for people in these communities to access banking services, leading to a higher reliance on alternative financial services, such as check-cashing outlets and payday lenders, which often have higher fees.
Credit availability: As regional banks face financial troubles, they may become more risk-averse, tightening their lending standards. This could make it harder for Black individuals and businesses to obtain credit, potentially exacerbating the existing racial wealth gap.
Impact on local businesses: Many small and local businesses, including those owned by Black entrepreneurs, may rely on regional banks for financing and other services. The financial troubles faced by these banks could lead to a reduction in loans and financial support for these businesses, further impacting the local economy and employment opportunities.
Loss of jobs: Regional banks employ a significant number of people, and the financial troubles faced by these institutions may lead to job losses. This could disproportionately affect Black workers, who are already more likely to face higher unemployment rates.
Economic ripple effects: The banking sector is interconnected, and the troubles faced by regional banks may have broader economic implications, including reduced consumer confidence and spending, which can affect Black communities.
Impact on 401(k)s and investment portfolios: Many people, including Black individuals, have retirement savings and investment portfolios that are exposed to the stock market, including stocks of regional banks. Shares of PacWest Bancorp (PACW.O) declined Thursday. Zion Bancorp (ZION.O) fell by 12% and Comerica (CMA.N) was down 11%. KeyCorp (KEY.N) and Valley National Bancorp (VLY.O) fell by 7% and 4%, respectively. The decline in stock prices of these banks can negatively affect the value of these investments, leading to potential losses or reduced returns. This could be particularly concerning for those nearing retirement or already retired, as they may have less time to recover from market downturns. Moreover, it can also hamper the ability of younger investors to build wealth over time. For Black people who may already be facing a racial wealth gap and lower retirement savings, the decline in stock prices of regional banks could exacerbate these disparities, making it even more challenging to achieve financial stability and security. Efforts to minimize the impact of such declines and promote greater financial education and access to affordable investment opportunities can help mitigate these potential negative effects on the financial well-being of Black individuals and communities.
It is crucial for policymakers and financial institutions to address the challenges faced by regional banks to minimize the potential negative consequences on Black individuals and communities.
Reshonda Young, a Waterloo, Iowa native and entrepreneur, is driven to bridge the racial wealth gap through the establishment of the bank. As a community development financial institution (CDFI), this Black-owned bank will strive to empower people by providing accessible education, homeownership, and financial literacy. Young’s motivation stems from Waterloo’s identification by 24/7 Wall St., an online publication, as the worst place for Black Americans in terms of economic stability. With significant disparities in income, unemployment, and homeownership rates between Black and White residents, Young believes that a Black-owned bank can play a pivotal role in addressing these issues by lending to Black communities at higher rates than White-owned financial institutions.
In addition to her work to establish the Bank of Jabez, Young runs the Cedar Valley Black Business & Entrepreneurship Accelerator. This initiative has trained over 50 entrepreneurs and has been recognized as a model community accelerator. While the role of Black-owned banks in reducing the racial wealth gap may be significant, Young also emphasizes the responsibility of White-owned banks in addressing these disparities. She urges them to ensure accessibility, diverse representation in their workforce, and investment in programs catered to Black communities. As our society continues to grapple with financial inequality, the development of institutions like the Bank of Jabez and the implementation of inclusive banking practices represent crucial steps towards achieving economic stability for all.