According to Pew Research, denial rates of Black and Latino mortgage applicants in 2015 were 27.4% and 19.2% respectively compared to 10.9% for White applicants.  Per the Federal Reserve, denial rates on small business loan applications by Black and Hispanic applicants were 38% and 25% respectively compared to 17% for Whites. Denial rates for Black applicants have historically been twice that of White applicants.   

According to a study by the University of California at Berkley, Black and Latino mortgagors (borrowers) are charged millions of dollars more interest in aggregate relative to comparable White mortgagors.  The study revealed Black and Latino mortgagors are charged lending rates that are on average .08% higher than their White counterparts.  

Bank credit policies are driving these disparities.  These policies disproportionately impact Black and Hispanic communities.  Banks rely on debt-to-income and loan-to-value ratios that are implicitly biased against communities of color who generally have lower median incomes, wealth, and property values relative to comparable White communities.

There’s no economic reason to utilize these hard credit ratios.  Delinquency rates on home mortgages over the last 30 years average about 2.5% and default rates are even lower.  Average default rates for small business loans are higher at around 20%, but due to the importance of small business in the American economy as a job creator, banks should be made to satisfy demand and charge market rates to account for the inherent risk. Denying individuals and small business access to capital is anti-competitive and only serves the interest of big business which is predominantly owned and controlled by the top 1%.  With these policies, banks are effectively turning away good business while kneecapping local economies in communities of color. 

I'm from Camden, NJ.  It's predominantly Black (41%) and Latino (51%).  The median wealth of Black and Latino families in the US is around $17,200 (according to the Brookings Institute). Median income per capita in Camden from 2015-2019 was $15,000.  Labor force participation was 54% (a more accurate measure of unemployment), and 37% of Camden's residents lived at or below the poverty line.    

Among Americans that earn $192,000 a year or less, 85-99% of their wealth is attributed to the value of the home they own (per First American Bank).  Home ownership is the most common way Americans build generational wealth.  In Camden, only 39% of all homes are owner-occupied.  The median value of a home in Camden is currently around $78,100.  The ability to secure home loans would significantly boost the median household wealth of all residents that are currently renting and should lower their housing costs, assuming their mortgage payments are lower than their current monthly rental payment.  Given the current interest rate environment and rental inflation, this is a highly likely scenario.  Lower housing costs would increase city resident's disposable income, which could then be saved or spent in the local and US economies.     

I would like to give back to my community by starting and operating cooperative businesses.  I believe this is the best way to increase the median income of the City of Camden’s residents.  I also believe increasing the median income of the City’s residents is the most effective way to improve the quality of life of the City’s residents.  My proposed venture should create good jobs while helping the community gain a passive equity interest in each business; another key component of generational wealth and financial stability. 

I have a Bachelor of Science in Business Administration from Cornell University.  I have a Master of Science in Finance from Pace University’s Lubin School of Business.  I have over 20 years of experience working for multinational hospitality and banking firms.  I also have a 789 TransUnion score.   Despite my credentials and credit score, I’m unable to secure a small business loan because my net worth and income have been deemed inadequate by banks. 

I’m Black.  Neither of my parents finished college.  I’m two generations removed from share cropping ancestors, and three generations removed from enslaved ancestors.  This is relevant because most startups in the US are initially funded by a combination of personal wealth and loans from family and friends.  That path just isn’t an option for me and given the fact that the median wealth gap between Black and White families in the US is 12 cents per $1 of White wealth (per the Federal Reserve), I’m probably not alone.    

I’m one of the most well-equipped residents of my city to help rebuild our city and economy, but I can’t secure the funding I need to do this.  I feel like I’m letting my community down; especially the young people in my community who haven’t necessarily been welcomed with open arms by established local businesses; including local businesses that received substantial tax breaks from local government for the sole purpose of providing jobs to city residents.  My community is suffering from unemployment and poverty and has done so for a long time.  We need a way to pick ourselves up, and the ability to start our own businesses is the most viable solution to our problems.