Report urges banks to address ‘low trust levels’ among black business owners
BLACK-led business organization urges UK banks to do more to help close the wealth gap between black communities and others after new report found less than half of black entrepreneurs trust banks to have their best interests in mind.
The search for the Black business network, a business and networking support center, found that less than half of the more than 800 black entrepreneurs surveyed believed they could trust UK banks to back them with the capital to grow their businesses.
The study, called Black, British. In business and proud and commissioned by Lloyds Bank, provides quantitative analysis of a long-standing complaint among BAME business owners regarding lack of access to capital and the important role it plays in a company’s bankruptcy.
It found that less than half (43%) of black business owners surveyed trust banks to have the best interests of black entrepreneurs in mind. This low level of confidence has a significant impact on borrowing habits.
Entrepreneurs looking for financing usually turn to venture capitalists if they are focused on technology, community, or personal wealth. The Black Business Network found that black business owners are more likely to be self-financing (34%) than to use bank financing (13%).
One of the main reasons self-funding levels are higher is the emphasis black business owners place on working with others who support and understand their culture and lived experience. Research found that more than half (53%) of black business owners surveyed experienced discrimination in response to their entrepreneurial efforts.
While there are those who are successful in starting their businesses by being self-financing, the Black Business Network claims that many more black entrepreneurs lack not only financial support, but also key networks and expert advice than those who do. banks can give.
The report made a number of recommendations. Among them, UK banks were to take steps to improve cultural awareness and representation of blacks in banking, partner with local and local community organizations to gain trust and provide focused financial support to build equity capital. .
Shari Leigh, founder of Black Business Network and member of the Black Business Advisory Committee said, “For the black business community, these findings are not new. The legacy of ties to the slave industry and untreated structural racism remain at the forefront of conversations within Britain’s black community.
These results make reading uncomfortable, to which we cannot and will not back down
Paul Gordon, Managing Director, SMEs and Medium Enterprises, Lloyds Bank Commercial Banking
“It’s common to balance the idea of want and need when engaging with traditional financial institutions, questioning the importance of our feelings and visibility.
“It just shouldn’t be that way. We use, work for and contribute to these institutions and we need to be seen and heard. This research is important because it quantifies the shameless thoughts and experiences of black business communities. “
Paul Gordon, Managing Director, Small and Medium Businesses, Lloyds Bank Commercial Banking recognized the systemic barriers that hinder black entrepreneurs and said that following the report, Lloyds is committed to “large-scale change”.
“These results make reading uncomfortable, which we cannot and will not deviate from,” Gordon said. “We are taking steps to better understand the needs of Black colleagues and clients through our Race Action Plan and by working with our partners, including the Black Business Network, Foundervine, and the Black Business Advisory Committee.”
He added: “Banks have a vital role to play in creating a more diverse and inclusive business community in the UK which will benefit the country. We know we still have a long way to go, and it’s not an easy fix or a matter of better reporting what we’re doing. We are committed to leading large-scale change and collective action to help pave the way for black-owned businesses to thrive. “
However, the entrepreneurs who spoke to The voice remained cautious.
Kameese Davis, CEO and Founder of Nylah’s Naturals, and who recently won an investment in a recent edition of Dragon’s Den said: “Historically, whites have had working capital to prove their concept. Black people have to prove their concept to get working capital, so we are already at a disadvantage. Said Kameese Davis, CEO and Founder of Nylah’s Naturals, which also recently won an investment in a recent edition of Dragon’s Den. “A huge barrier is that banks often don’t understand our markets and our business models.
“Unconscious biases come into play and I think it would be naive of us not to think that is the case. So the fact that the report recommends ring-fenced support is good because it will protect black entrepreneurs from these unconscious biases.
“But it will be really interesting to see how they deploy this money and if it gets to the people who really need it. I would also like to know if the money they suggest will be allocated specifically to blacks, and not to BAMEs, as this may create an additional hurdle for us.
Davis continued, “The fact that Lloyds recognizes the problem is a good first step, I think they recognize the problem, because we’ve been crying about it for ages. There is a disparity here. We are not able to be economically competitive because we are not getting the seed funding.
Nicholas Okwulu, founder of south London-based social enterprise PemPeoples, is much more skeptical.
“Let’s not sit back and pretend the UK banks never wanted our business,” he said The voice. “The only reason banks like Lloyds are looking at this problem is that they see a lot of young black entrepreneurs who are setting up successful businesses but not opening accounts with any of the big banks.
“I think among black business owners there is a higher level of trust in online banking. They seem more open and understanding of what we’re trying to accomplish. I have a lot of friends who run small businesses and I don’t know of any who have a business account with one of the big UK banks.
Alisdair Soyode, founder of BEN TV, Europe’s leading ethnic satellite TV channel, praised the report’s focus on improving the cultural awareness of bank managers who work with black business leaders.
“I have a number of friends in the manufacturing sector who couldn’t get funding because their main markets are in the Caribbean or Africa. What banks often don’t understand is that once a particular product becomes popular in these regions and elsewhere, black customers in the UK also start buying it. There is therefore every chance that the banks will get their money back.
The Black, British. In business and proud The report comes at a time when the focus is increasingly on black LED businesses and consumers. Last year, a report by the Federation of Small Businesses (FSB) and the Aston University Research Center on Ethnic Minority Entrepreneurship (CREME) found that businesses run by entrepreneurs from Black and Ethnic Minorities (BAMEs) contribute up to £ 25 billion to the UK economy.
However, research also found that they were still held back by barriers that hindered their growth, including access to external finance.