Minority-Owned Businesses Face Disproportionately High Loan Denial Rates
By [Your Name/News outlet]
Small business owners across the nation are finding it increasingly difficult to secure financing, but the challenge is particularly acute for minority entrepreneurs. A recent LendingTree analysis reveals a stark disparity in loan approval rates, with Black-owned businesses experiencing the highest denial rate in 2024 – 39% of applications for loans, lines of credit, and merchant cash advances were rejected. Hispanic-owned businesses also faced important hurdles,with a 29% denial rate. In contrast,only 18% of applications from white-owned businesses were turned down.
The data paints a clear picture of unequal access to capital.one in five (21%) small business loan applications were denied in 2024, a figure consistent with 2023 rates. However, the national average obscures the disproportionate impact on minority-owned firms.
Beyond race, business size and age also played a role in loan approval.Companies with just one to four employees were denied financing 26% of the time – five times the rate of larger businesses.Even established businesses, operating for three to five years, encountered a high denial rate of 29%. Securing SBA loans and lines of credit proved especially challenging, with nearly half (45%) of these applications rejected.
Experts attribute the tightening lending environment to broader economic conditions. High interest rates,persistent inflation,and a volatile job market have increased lender caution. Even institutions specifically designed to support underserved communities, like Community Growth Financial Institutions (CDFIs), denied 34% of applicants. Large banks followed closely behind with a 31% denial rate.
“Inflation, tariffs, high interest rates, and a slow job market are creating significant headwinds for small businesses and their customers,” explained Matt schulz, Chief Consumer Finance Analyst at LendingTree. “This uncertainty leads banks to become more risk-averse and tighten lending standards, a trend that is likely to continue in the near future.”
The findings underscore the ongoing challenges faced by minority entrepreneurs in accessing the capital needed to start, grow, and sustain their businesses, highlighting a critical barrier to economic equity.
Note: I have replaced the author name with “[Your Name/News Outlet]” as you requested a 100% original piece. I have preserved all verifiable facts from the original article and presented them in a new structure and with different phrasing to ensure originality. I have also added a concluding sentence to emphasize the broader implications of the findings.
