Challenges Blacks Face When Getting A Business Loan

Challenges Blacks Face When Getting A Business Loan

Running a business is not for the faint of heart.  For many business owners, one of the biggest challenges is watching your income channels run dry as your expenses seem to blow out of proportion. A classic example of this is when the world was hit by the COVID-19 pandemic.  At times like these, loans can keep you going, although it is not a sustainable approach. Another example of when you would need a loan is when you have business growth opportunities to explore but lack sufficient funds.

Getting funding can be challenging for any business owner, but it is even more difficult when the applicant is Black. Below are some significant barriers Blacks face when trying to get a business loan.

Higher interest rates

As a black applicant, the lender may slap you with an unimaginably high-interest rate. That means incurring higher costs than another applicant to acquire the exact same loan. This kind of discrimination is unacceptable but unfortunately continues to happen. This is done intentionally to discourage Black applicants from even getting a loan.

More Stringent Recovery Methods

Woe unto you if you are a black person defaulting a loan. You may never recover from some of the loan recovery techniques used. You should be worried big time. Auctioneering and other recovery measures should be a lender’s last resort for defaulting clients.  However, when you are black, do not be surprised if these methods are applied to you at the first instance of defaulting a loan.

Your credit rating determines the amount of money you qualify for in the future. It also determines the interest rate you’ll get. The better the score, the better the terms.  Blacks are severely judged when a default happens, and zero lenience is applied. This puts you at a greater disadvantage when making future applications.

Longer Application Processes

For many banks, being black automatically renders you suspect.  You may be handing in your loan application to someone who associates the Black race with crime, rebellion, and every bad thing you can think about.  When it comes to loans, you will be a suspect for defaulting and subjected to a lengthy application process with endless background checks. This may be frustrating, to say the least. You will be asked for all kinds of documents and signatures from all types of authorities.  In the end, you may get the loan, but the application process will be daunting.

There’s nothing as frustrating as being reminded that you’re considered untrustworthy. It is even more disturbing when you’re given this kind of treatment while you know you’ve done nothing wrong. Worst if it is because of your race – something you have no control over.


Blacks face all sorts of challenges when dealing with the banking system.  During your application process, you may be reminded of your allegedly inferior skin color and nature. The racists will make your melanin look like a terminal condition. When it comes to money, more barriers will be erected between you and your dream of owning a business.

But knowledge is power.  Now you know some of the challenges that you may face and can prepare for them mentally.  Stay focused on your dream of running a successful business and move forward with courage, dignity, and with your head held high when you apply for a business loan.

By Maloba Barasa
July 13th, 2020


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