While Wall Street works to contain the biggest American bank failure since the 2008 financial meltdown, founders of startups who are people of color worry it could become even harder to secure financial support.
FILE - Security guards let individuals enter the Silicon Valley Bank's headquarters in Santa Clara, Calif., March 13, 2023. While Wall Street struggles to contain the banking crisis after the swift demise of SVB the nation's 16th largest bank and the biggest to fail since the 2008 financial meltdown industry experts predict it could become even harder for people of color to secure funding or a financial home that supports their startups.
“All these folks that have very special circumstances based on their identity, it’s not something that they can just change about themselves and that makes them unbankable by the top four ,” said Asya Bradley, a board member of numerous startups who has watched the WhatsApp group grapple with SVB's demise.
“That’s going to be more challenging for people who don’t fit the traditional credit box, including minorities,” Klein said."A financial system that prefers the existing holders of wealth will perpetuate the legacy of past discrimination.” Entrepreneur Amy Hilliard, a professor at the University of Chicago Booth School of Business, knows how difficult it is to secure financing. It took three years to secure a loan for her cake manufacturing company, and she had to sell her home to get it started.
Red-Horse Mohl — who has raised, structured and managed over $3 billion in capital for tribal nations — said most larger banks are led by white men and majority-white boards, and “even when they do DEI programs, it’s not a really deep sort of shifting of capital.” Some have seen customers withdraw funds and move to larger banks out of fear, even though most minority-owned banks have a more traditional customer base, with secured loans and minimal risky investments, she said.
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