Despite Hispanics – Latinos are the fastest-growing group of small business owners in the United States, new research by the Stanford Latino Entrepreneurship Initiative shows racial bias in banking.
The data reveals Hispanic – Latino business ownership and revenue grew at a faster rate over the last 10 years compared to all other business owners.
However, despite the growth, Stanford’s research shows a Hispanic – Latino-owned business is 60-percent less likely than a white-owned business to be approved for a loan from a major national bank; a trend hurting the economic growth and national job growth.
In Massachusetts, Hispanics -Latinos make up 11-percent of the state’s population but own less than 3-percent of businesses with employees, according to a U.S. Census survey of entrepreneurs released in 2018.
State leaders are aware of the problem, which is even worse in the construction and design industries, reports WGBH. Black and Latino people combined own less than 3% of the businesses available to bid on often lucrative contracts from Massachusetts’ public agencies, according to a 2017 disparity survey commissioned by the State Division of Capital Asset Management and Maintenance, or DCAMM.
“There’s not a lot of diversity,” Lt. Gov. Karyn Polito said last year, describing a classroom for contractors in Massachusetts getting recertified. “I think about that a lot in my work with the governor and why we need to change that.”
Minority business owners and their advocates point to a range of causes for these low ownership rates — from a longstanding racial wealth gap to the struggle to get bank loans and meaningful help from state officials charged with creating more access and opportunity for minority entrepreneurs.
Organizations representing Black, Hispanic – Latino and other communities of color in Boston filed a Title VI civil rights administrative complaint in February with two federal agencies alleging that the City of Boston is in violation of Title VI of the Civil Rights Act because the city’s public contracting processes discriminate against businesses owned by Hispanic – Latino and other people of color.
Next City reports that a disparity study analyzed more than 47,000 contracts worth almost $2.2 billion that the city of Boston awarded between 2014 and 2019. Of that, just 0.8 percent, or $18 million, went to Hispanic-owned businesses.
The Greater Boston Latino Network, and Amplify Latinx submitted the administrative complaint to both the Department of Justice and the Department of Transportation, as both agencies administer various grants to the City of Boston.
One small effort to address the wealth gap separating Hispanics – Latinos from whites who have access to more equity is happening at City Fresh Foods in Roxbury.
The company which makes meals for schools and the elderly recently offered longtime employees — nearly all of them people of color — a chance to be co-owners of the business, reports WGBH.
“We all know there’s a big wealth gap around assets, especially in the communities of color. So this is a chance for folks to get a little something,” Sheldon Lloyd, City Fresh Foods co-founder said.
Stanford’s research also shows recent Small Business Administration (SBA) measures for loans specifically committed to marginalized community businesses in the Paycheck Protection Program (PPP) loan program is the first step to equitable lending. However, there is also a substantial need for implicit bias training at big banks. Doing so will further continue and capitalize on the growth of the fastest-growing sector of small businesses, Latino-owned businesses.
Publisher’s Note: This story is an aggregate from Black And Latino Business Ownership In Massachusetts Lags Far Behind National Average, Black and Latino Businesses Say Boston is Violating their Civil Rights, and Latino-owned businesses seeing record growth despite racial disparities in lending.