{"id":170158,"date":"2024-05-30T08:53:10","date_gmt":"2024-05-30T12:53:10","guid":{"rendered":"https:\/\/ncrc.org\/?p=170158"},"modified":"2024-05-29T16:55:11","modified_gmt":"2024-05-29T20:55:11","slug":"the-cfpb-won-big-at-the-supreme-court-but-the-fight-over-small-business-lending-discrimination-is-just-beginning","status":"publish","type":"post","link":"https:\/\/ncrc.org\/the-cfpb-won-big-at-the-supreme-court-but-the-fight-over-small-business-lending-discrimination-is-just-beginning\/","title":{"rendered":"The CFPB Won Big At The Supreme Court — But The Fight Over Small Business Lending Discrimination Is Just Beginning"},"content":{"rendered":"

After the Supreme Court found the Consumer Financial Protection Bureau\u2019s (CFPB) funding structure constitutional, racial and economic justice advocates had many reasons to celebrate.\u00a0<\/span><\/p>\n

But despite that good news, one key CFPB policy that will help combat discrimination in small business lending remains under threat. <\/span>Another lawsuit<\/span><\/a> filed by powerful lobbyists at the American Bankers Association (ABA) \u2013 and a pair of Texas-based affiliates that allow the bank industry to bring the case in a favorable jurisdiction \u2013 threatens to repeal a set of rules known as Section 1071 before its implementation. <\/span>Conservative lawmakers<\/span><\/a> and predatory lenders will continue to try and weaken the CFPB in order to avoid accountability for racist lending practices that have skyrocketed their own profits and deprived communities of color of wealth.\u00a0<\/span><\/p>\n

The stakes are too high for racial and economic justice advocacy groups to remain complacent. Even without the key details Section 1071 will provide, existing data demonstrate that people of color are being excluded from owning a business, creating wealth and bolstering the nation\u2019s economy.<\/span><\/p>\n

Racial Inequities in Capital Access<\/b><\/p>\n

As of 2021, there were 5.7 million employer firms in the US. Black people owned <\/span>2.7% of them<\/span><\/a>, in a country where Black people are about 12% of the population. The 19% of the US population who are Latino own just <\/span>6.9% of the nation\u2019s businesses<\/span><\/a>.<\/span><\/p>\n

The underrepresentation of people of color in small business ownership is directly tied to racial wealth inequality. Personal savings were <\/span>the most common source of start-up capital<\/span><\/a> in a recent Small Business Administration (SBA) survey of entrepreneurs \u2013 and given <\/span>the vast racial wealth divide<\/span><\/a> in the US, non-White people are far less likely to have the money to act upon their business ideas. <\/span>Recent Federal Reserve estimates suggest<\/span><\/a> the median wealth is $44,900 for Black households and $61,600 for Latino households, while the median wealth is $285,000 for White households.\u00a0<\/span><\/p>\n

A would-be business owner who cannot cover their start-up costs from money they already have must borrow it instead. But small business owners of color <\/span>continue to report discriminatory treatment<\/span><\/a> by lending institutions, as NCRC\u2019s \u201cmystery shopper\u201d investigations have <\/span>repeatedly<\/span><\/a> found<\/span><\/a>. <\/span>The 2022 Small Business Credit Survey<\/span><\/a> found that<\/span> 35% of White-owned employer firms successfully obtained all the traditional funding they sought in 2021 in contrast to, just 19% of Hispanic-owned firms, 16% of Black-owned firms and 15% of Asian-owned firms.\u00a0<\/span><\/p>\n