NCRC Releases Small Business Lending Study (July 2010)

Small businesses are the driving force behind job creation, yet many struggle to find the capital they need to survive and grow. Women and minority-owned businesses face additional impediments. Today, we’re pleased to announce a new NCRC study, “Does CRA Small Business Lending Increase Employment: an Examination on a County Level.” The study looks at over 500 counties around the country, exploring the national impact of Community Reinvestment Act on small business lending.

The study finds a positive correlation between small business lending and employment. The study also reveals troubling racial inequalities in small business lending. In fact, our analysis finds that counties with greater percentages of minorities had lower rates of small business lending and employment.

The NCRC study looked at 2006 lending data for dozens of counties around the country. Some of the specific findings in NCRC’s study include:

• There is a positive correlation between small business lending and employment; the more small business lending in a county, the higher the employment rate.
• Almost 55 percent of the small businesses studied received loans in counties with less than 20 percent African Americans. This ratio declined to 48 percent in counties with 30 percent or more African Americans, on average.
• Employment rates are lower in counties with higher percentages of minorities and African Americans. The average employment rate is 2 percentage points higher for counties with less than 20 percent African Americans than in counties with more than 30 percent African Americans.

We urge you to share this study with your member of Congress; tell them CRA is good business, and good for small businesses!

Click here to download a PDF of the report

Click here to download the press release as a PDF