“Businesses need affordable capital in order to grow, create jobs, and generate economic activity,” said Spencer Cowan, Vice President of Research at Woodstock Institute. “This research clearly shows that businesses in low-income and majority minority communities do not have the same opportunities to expand as businesses in high-income, majority white neighborhoods, potentially exacerbating the wealth gap and stifling entrepreneurship that could help rebuild distressed neighborhoods.”
Data from all regulated financial institutions shows the impact of the Great Recession on the availability of credit. Lending to businesses declined by 4.8 percent nationally between 2008 and 2011. The dollar volume of small loans to businesses declined even more sharply than lending to businesses generally, down about 14.6 percent nationally between 2008 and 2011.
A key move in the industry’s playbook is to convince states that the best way to address predatory payday lending is to regulate the industry. But regulations in states that authorize payday loans are too oft en written by industry and porous at best, and across the board fail to eliminate the hooks that trap people in these usurious and harmful loans.