Investopidia: Small Business Contract Discrimination

Investopidia, March 3, 2021, Small Business Contract Discrimination

Small business contract discrimination refers to the notable disparity in the number of government contracts that go to minority and women-owned businesses when compared to other small businesses.

Government contracts represent a significant source of income for small business. The U.S. government has made it a priority to send federal contracts to small businesses since the second half of the 20th century. And the amount of money spent on government contracts is increasing.

In the Great Recession period, SBA loans to Black businesses dropped from 8% to about 3%, according to a study from the National Community Reinvestment Coalition. Moreover, loans tend to concentrate in middle and upper income areas. Black individuals, who constitute about 12.6% of the U.S. population, own about 2.1% of small businesses. Latinx individuals, who make up 16.9%, own about 5.6% of businesses.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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