NCRC Report Charts Lending Deserts and Oases for U.S. Small Businesses, Reveals Plummet in Access to Loans

Washington, DC – Today, the National Community Reinvestment Coalition (NCRC) released “Small Business Lending Deserts and Oases,” a breakthrough report on small business lending trends in the United States and disparities in access to credit for small businesses. This is one of the first reports to comprehensively map small business lending “deserts” and small business lending “oases” in the United States. The NCRC report reveals a significant national decline in small business lending.

”Small Business Lending Deserts and Oases” analyzes data on private-sector and federally supported lending practices to determine the locations of “lending deserts” and “lending oases.” It also examines lending rates to women- and minority-owned small businesses for federally supported loans. Visit NCRC’s website to view and download the report.

Among the report’s findings:

  • A huge drop in small business lending: In 2007, 61.6 percent of small businesses nationwide received private-sector loans. By 2012, only 16.4 percent of small businesses nationwide received private-sector loans.
  • Geographic disparities in private-sector small business lending: In 2012, only 7.5 percent of small businesses in “deserts,” the counties with the least access to lending (generally in the Midwest and South), received loans, while 21.3 percent of small businesses in “oases,” the counties with the greatest access to lending (generally on the East and West Coasts), received loans.
  • Gender disparities in federally supported small business lending: In 2012, approximately 9.3 Small Business Administration (SBA) 7(a) loans were issued per 10,000 women-owned businesses, in contrast to 24.7 SBA 7(a) loans per 10,000 male-owned small businesses.
  • Racial disparities in federally supported small business lending: In 2012, 12.3 SBA 7(a) loans were issued per 10,000 Hispanic-owned small businesses, and 6.7 SBA 7(a) loans were issued per 10,000 African-American-owned small businesses. 32.7 SBA 7(a) loans were issued per 10,000 Asian-owned small businesses and 16.2 SBA 7(a) loans were issued per 10,000 white-owned small businesses.

“This analysis should serve as a wake-up call to the huge drop in lending small business owners have been facing since the recession, and the heightened challenges small business owners in certain geographic areas are facing in obtaining small business lending,” said NCRC President and CEO John Taylor. “Small businesses are a key engine driving economic growth, and it is essential that they have access to credit and capital.”

“The report also shows significant gender and racial disparities in access to federally supported small business lending. In order to assess what is happening with private-sector small business lending when it comes to gender and race, which is currently unreported, we need the Consumer Financial Protection Bureau to begin to collect data on the gender and race of small business owners applying for small business loans, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.”

The report was funded through the WE Lend Initiative, established by the Sam’s Club Giving Program to increase access to capital for women entrepreneurs. A collaborative grant awarded to NCRC, Accion, the U.S. Network, and Women Impacting Public Policy (WIPP), the WE Lend Initiative also supports capacity building for SBA-recognized Women’s Business Centers across the country.

“By collaborating with like-minded organizations such as NCRC, Accion and WIPP, we can increase awareness for training and lending resources for entrepreneurs in lending deserts, while continuing to improve access to capital in lending oases,” said Sam’s Club President and CEO Rosalind Brewer. “The valuable research in NCRC’s report further showcases the access to capital gaps in our country. The report guides our commitment to serve our Business Members and other Main Street business owners through smarter grant-making and targeted community development.”

See the full report here. For more information about the WE Lend Initiative, please visit www.we-lendinitiative.org.

About the National Community Reinvestment Coalition (NCRC):

The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America’s working families.

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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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