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:
“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:
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.
In recent years, Creative Investment Research has delved into various initiatives and strategies aimed at tackling the wealth gap, economic disparities and financial inclusion. In 2022, CEO William Michael Cunningham released a book examining the unique challenges faced by minority-owned businesses in accessing financial resources and support (Thriving As a Minority-Owned Business in Corporate America: Building a Pathway to Success for Minority Entrepreneurs 1st ed. Edition). In an article, we explored the development of a maternal health financing facility for the United States, which aims to improve maternal health outcomes by channeling investments into this crucial sector. Continuing our examination of initiatives to address financial inequality, another article we published in the American Banker Newspaper suggested the creation of a liquidity pool by the Federal Reserve to support Black banks, which brings us to the establishment of the Bank of Jabez, Iowa’s first Black-owned bank.
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.
According to the Wall Street Journal, Nike founder Phil Knight “are set to announce they’re donating $400 million to rebuild Portland’s Albina area, a historically Black community whose residents have experienced decades of disruption and displacement.
Rebuild Albina will be a project of the newly established 1803 Fund, a nonprofit that aims to combine elements of private investing and philanthropy. The number references the year that explorers Lewis & Clark decided to bring York, a Black frontiersman and slave, with them across the country to the Pacific.”
