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Title: Disinvestment, discouragement and inequity in small business lending
Contributors: Lee, Amber
Mitchell, Bruce
Lederer, Annaliese
Keywords: Small business—United States—Finance
United States—Race relations—Economic aspects
Minority business enterprises—United States—Finance
Discrimination in mortgage loans—United States
Issue Date: 2019
Publisher: National Community Reinvestment Coalition
Place of Publication: Washington, D.C.
Description: Banks play an important role in financing small business growth, yet the data on bank lending is limited. In 1977, the Community Reinvestment Act (CRA) required banks to report on the amount of small business lending to neighborhoods at different income levels in counties across the country. This was done to provide oversight and correct for a history of discriminatory lending practices against low-income and minority neighborhoods, commonly referred to as “redlining.” While the CRA small business data provided some insight into lending patterns in low-income areas, it didn’t provide data on the income or minority status of business owners. The only other publicly available data on small business lending comes from the small percentage of business loans backed by the Small Business Administration (SBA) 7(a), which comprises only 3% to 7% of small business loan volumes.3 This lack of data cloaks bank small business lending practices, hindering regulators’ and stakeholders ability to monitor and hold banks accountable. To dig deeper, the National Community Reinvestment Coalition (NCRC) took two approaches. First, it used publicly available data on small business lending to analyze bank lending practices from 2008 to 2016. Then, NCRC used mystery shoppers to examine differences in the customer service experiences for potential borrowers of different races in Los Angeles in 2018.
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Appears in Collections:Monographic reports and papers (Publicly Accessible)

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