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March 15, 2014

Loan Rebound Misses Black Businesses


Black entrepreneurs have largely missed out on a rebound in federal small-business lending since the financial crisis ended.

More than four years into the nation's economic recovery, African-Americans looking for loans are struggling to overcome deeper financial distress, tighter lending standards and cutbacks by some lenders.

U.S. financial institutions made $382.5 million in Small Business Administration loans to black-owned businesses in the fiscal year ended Sept. 30, according to an analysis of the agency's data by The Wall Street Journal. Black borrowers received 1.7% of the $23.09 billion in total SBA loans.

The percentage is down sharply from 8.2% of overall SBA loan volume in fiscal 2008. By number of loans, black-owned small businesses got 2.3% of the federal agency's roughly 54,000 loans last year, down from 11% in 2008.

The declines among black small-business owners are unusually steep compared with other minorities. After the crisis hit, Asians and Hispanics also got a smaller percentage of total SBA loan volume, the analysis shows. But those two percentages shrank less from their precrisis peak—or have grown faster as the crisis recedes and the U.S. economy gains more traction.

SBA loans are a crucial source of financing......


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