The Federal Reserve Bank took a look at racial inequities and their impact on minority business owners.
DEKALB COUNTY, Ga. — The country’s central bank is calling out inequities in the business world, pointing to the struggles of business owners of color. Those challenges only grew during the pandemic, resulting in price hikes, layoffs, and some businesses going under.
In a panel Tuesday, the Federal Reserve held a panel on the impact of racism on business and financial services. The Fed noted people of color typically pay higher interest rates and work lower paying jobs compared to white Americans. The Fed also stated systemic racism limits opportunities for people of color and threatens the health of the overall economy.
“All the monetary policy, quantitative easing in the world will not be adequate if the emerging majority of Americans, people of color, remain on the outside of the banking system looking in and are unprotected from the vultures looking to take advantage of them,” Bill Bynum, CEO and founder of Hope Enterprise Corporation, said during the panel.
Kristopher Ku and his mother ran into issues getting their business, Amazing Wings, off the ground a year ago, during the pandemic. Ku believes more translators, easier access to loans and better financial education could lead to more success for business owners of color.
“I’m a first-generation Korean American,” Ku said. “My mom came all the way from South Korea, coming here for more business opportunities, more freedom, to start a family here so we could have this type of freedoms. Some minorities, especially coming straight from their foreign countries or not being from America, they’re not really familiar with how the system works in America to get loans or who they speak to.”
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David Comer has owned a vacuum business in DeKalb County for 16 years. He said over the years, staff has heard racist remarks. However, he said there hadn’t been extreme examples of systemic racism since the business started. Comer did note the potential for minority business owners to get deterred and discouraged if they faced a lack of access to funding and progress.
“When attempting to get loans some of my [white] counterparts suggested I get, they’ve gotten them,” Comer said. “I’ve had difficulty getting them in the same position for the same amount of interest with the same credit score. You go out and you’re trying to achieve funds to better your establishment and it becomes a difficult road. Where the average businessperson, whoever that may be, might go to one or two banks to help them establish their business in a better way, if you need to go to six or seven, it’ll definitely deter you from going through that process.”
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Comer said he is in favor of more funding through grants and one-on-one conversations with policymakers, so they gain a better understanding of the struggles facing minority business owners.
“It’s a meeting of the minds,” Comer said. “If more people who could make a difference, either institutions or individual private lenders or investors, would come to play and pull minority businesses together and talk about their needs, I think it’s a fairly easy problem to resolve.”
Atlanta Fed chair Raphael Bostic said a committee on payment inclusion is looking at ways to avoid predatory practices and ensuring people of color find more paths to higher paying careers.
“We can stimulate conversations to really focus on inclusion and try and bring together people so that inclusion actually happens,” Bostic said. “Not having access to services or using different ones sometimes isn’t because you’re sophisticated. It’s because services that would be the equivalent for you just don’t exist. This can really help change those conversations.”
It’s those conversations, Comer said, that could determine the survival of the businesses and the communities they serve.
“There are more doors that will open, so my motto is typically not to stop at the one that didn’t do what I thought was fair, but to continue going until I found someone who would,” Comer said.
The Small Business Association of Georgia has a learning platform and resource guide available, along with a host of tools for loans, financing real estate, accessing microloans to help start a small business, local assistance specific to zip code and government contracting for underserved communities.