Home Argentina crisis How do you get a loan when your business is located in the “wrong” part of town? | Genetic marks

How do you get a loan when your business is located in the “wrong” part of town? | Genetic marks


Wand improve your relationship with your banker? The answer is simple: just move your business to a nicer part of town. Unfortunately, this is the very real problem facing many small businesses across the country that are located in low income or minority areas.

This conclusion was drawn from a recent study by the Woodstock Institute, a nonprofit research and policy organization specializing in fair lending, wealth creation, and financial systems reform. The researchers there studied small businesses in low-income areas and communities of color in various parts of Illinois and compared them to their counterparts in high-income, predominantly white areas.

So guess what they found? Firms in low- and moderate-income zones received – surprisingly – a lower share of bank loans than firms in higher-income zones. The same goes for small businesses in predominantly non-white areas.

The impact on these small businesses is significant. Many are forced to become their own banks or forced to go to online or “payday” lenders who charge shockingly high interest rates because they are unable to get the capital they need from banks. traditional banks to develop their activities.

“I’m not really able to run at full capacity as I would like with my business due to the fact that I can’t get any capital,” said Jemiyah Beard, owner of a small business in Champaign, in the Illinois, at the Woodstock Institute. Beard can’t get a traditional bank loan, so his new business, Mary’s Master Cleaning Service, can bid on contracts and hire former incarcerated people who need jobs. She is certainly not alone. “I was my own bank. Nobody should have to do this, ”complained another business owner.

Is it outright racism? Simple economy? Ignoring? I’m sure these are all factors. But the most important thing is to discuss how to solve this problem. And moving to a nicer part of town is not – and shouldn’t be – the answer.

There are things that can be done. The institute’s recommendations include government surveys to identify the extent of potential racial discrimination and the role it plays in bank lending, as well as better training for loan officers.

“The fight for fair loans is far from over,” said Dory Rand, president of the Woodstock Institute, in a press release. “Banks and policymakers should be proactive in reversing these trends so that this is no longer the norm by which the whitest and wealthiest neighborhoods receive a disproportionate share of small business loans. “

OK. But this problem will not be solved overnight. It’s an unfair playing field and it means business owners will have to fight harder. Given the facts from the institute’s study, it is important that those seeking funding are prepared to face potential biases. And the best way to do that is to keep solid books, accumulate money, prove without a doubt that debts can be honored, surround yourself with reputable advisors, and have a great plan. business. It is not a guarantee to get a loan, but it will help improve the odds. And these business owners need all the help they can get.


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