By Michael Romain
The more low-income and the more minority a Census tract is, the harder it is for businesses within that tract to access credit, report says
An August report, “Dis-Credited: Disparate Access to Credit for Businesses in the Chicago Six County Region,” by the Woodstock Institute, a nonprofit policy organization, has found that banks were statistically less likely to lend to businesses located in low-income and majority minority Census tracts between 2008 and 2012. The report examined “geographic patterns of access to bank capital for businesses in the Chicago six county region, with a focus on smaller loans and other types of credit, amounts under $1 million, that are more likely to benefit smaller, local businesses that create economic opportunity within neighborhoods,” according to the Executive Summary.
Studying data from the Federal Financial Institutions Examination Council, the U.S. Department of Housing and Urban Development, and the U.S. Census, the Institute discovered that since the Great Recession, lending throughout the country declined by nearly 5 percent between 2008 and 2011. The dollar amount of small loans, which are particularly vital to small businesses, declined even more dramatically than did overall business lending, dropping nearly 15 percent between 2008 and 2011.