Small businesses are essential for creating vibrant and self-sustaining communities, but research finds businesses in low-income communities and communities of color consistently struggle to access safe and affordable credit.

At both the federal and state level, Woodstock Institute works to ensure all communities have access to the financial services necessary for building a strong, local business sector.

Small businesses create economic opportunity within neighborhoods, but access to affordable credit is necessary in order to grow, hire more workers, and make investments that help build wealth within communities. Research shows businesses in low-income communities and communities of color in particular face an uphill battle accessing traditional bank loans, which tend to be more transparent and affordable than loans from nonbank, online lenders.

Woodstock Institute’s Patterns of Disparity: Small Business Lending research series examines small business lending trends across the country to determine the extent to which banks are meeting the credit needs of businesses, to identify racial and economic disparities in access to credit, and to provide policy recommendations for addressing predatory business lending practices.

For example, in Illinois, we found that over a three-year period, businesses located in low-to-moderate income (LMI) census tracts received only 19.3% of bank loans under $100,000 despite making up 27.0% of all Illinois businesses. Making up this deficit would require 46,648 more loans totaling $618 million.