A Chicago-based think tank on Tuesday called for a federal investigation into racial disparity in small-business lending.
Banks in Illinois, and the nation as a whole, are more likely to lend to white-owned small businesses as opposed to their minority counterparts to the tune of hundreds of millions of dollars.
“In airports and train stations, we are told,' if you see something, say something.' This is similar," said Brent Adams, a co-author of the report from the Woodstock Institute, which focuses on finance and social justice. "We saw something and we’re saying something and now the appropriate authorities have the responsibility to investigate, to figure out exactly what’s going on and how to institute measures to fix it.”
The report found over a three-year period that if the disparity between white and non-white communities could be equalized in Illinois, predominantly minority census tracts would have gotten 19,000 more loans, adding up to $460 million.
“So, businesses, of course, need access to capital and access to lending to grow, to expand, to manage cash flow, and to purchase needed equipment, and financing," said Lauren Nolan, another co-author. "The small businesses provide entrepreneurship opportunities and create jobs and of course without access to capital and the ability to grow, that that hinders our ability to create jobs."
The report was funded by the First Midwest Bank and Midland State Bank.
The group’s major recommendation is that the Consumer Financial Protection Bureau and the Department of Justice investigate the degree to which racial discrimination is at the root of the disparities identified in this and other similar reports.
