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Despite all the challenges involved in starting a business, a number of young Black Americans are betting on themselves and putting their energy into entrepreneurship. Many of the financial resources necessary to grow a small business, however, remain out of reach for Black Americans, who have long faced historical bias and systemic racism.
A recent paper in the Journal of Marketing Research, published online last month, found that Black entrepreneurs are still severely discriminated against by banks, even when they are more qualified than their white counterparts. In an attempt to update a similarly troubling study from a decade ago, a team of researchers conducted three field studies, with two focusing on Atlanta and Washington respectively, that yielded concerning results. Apparently, not much has changed in how discrimination is “tainting the American Dream for minority entrepreneurs,” as a report on the new paper eloquently puts it.
In the research from the Atlanta area, white and Black test subjects used fabricated portfolios to apply for business loans at banks to determine how the experiences of the two groups differed. But even when the Black testers had stronger financial profiles and higher credit scores than their white peers, they still received inferior loans.