Historically, Black, Brown and low-income communities have disproportionately less safe and affordable small business financing options

For Immediate Release: 
February 29, 2024

Contact: 
Olivia Goethals
olivia@sgstrategies.com | (309) 502-1991

ILLINOIS – Today, Illinois State Sen. Christopher Belt (D-Swansea), State Rep. Hoan Huynh (D-Chicago), Woodstock Institute, and other consumer advocates presented new data on the patterns of small business loan disparities during a virtual town hall with 75+ Illinois residents. Small businesses also shared their experiences in navigating the challenges of the post-pandemic economic environment. Discussions included access to credit, predatory lending, SB 2234 (Belt)–the Small Business Truth in Lending Act, and HB 5587 – the Consumer Protections for Small Businesses Act.

“Banks need to take a look at how they are accepting and denying credit access to individuals, specifically in Black and Brown communities, because they are a major reason why we are not able to better ourselves or our communities, said Stacie Folk, owner of Great Minds Escape.

Data shows that despite making up 27.9% of Illinois small businesses, businesses in low-to-moderate income census tracts only received 21.8% of small business loans from 2018 to 2022. While businesses in upper-income census tracts received 7.8% more loans relative to population.

“Small businesses are the backbone of our communities, and it’s important their voices are heard,” said Senator Belt (D-Swansea). “By working together, we can explore solutions that will contribute to the continued success of these businesses.”

“By supporting small businesses we are investing in the success and vitality of our state for all,” said State Representative Huynh (D-Chicago). “They are an essential part of our community, and this town hall was a chance to address the needs and concerns of business owners to ensure we are protecting them.”

Research shows that small businesses in Black, Brown, and lower income communities are disproportionately impacted when it comes to safe and affordable lending options,” said Brent Adams, Senior Vice President of Policy and Advocacy at Woodstock Institute. “Systemic racism is strongly evident when it comes to lending, including lending to small businesses. Nonbank small business lenders are essentially unregulated, making small businesses vulnerable to predatory lending practices because the borrower is not even entitled to know a loan’s interest rate before signing on the dotted line.” 

“Access to responsible capital is a top concern for small business owners, which is why our state must do more to ensure our entrepreneurs have the protections they need when seeking financing,” said Tasha Brown, Illinois Director, Small Business Majority. “We applaud Senator Christopher Belt for championing SB 2234, advocating for stronger lending transparency, and ensuring small business owners are protected.”

Nonbank “fintech” (financial technology) lenders to small businesses, which are mostly online, are unregulated in Illinois, as in most other states. 

SB 2234 and HB 5587 seek to establish a regulatory framework in Illinois for “non bank” lenders to small businesses based on a Small Business Borrowers Bill of Rights (BBOR). The BBOR has six core principles, including the right to transparent pricing and terms (including the loan’s APR), the right to non-abusive products, the right to inclusive credit access, and the right to fair debt collection practices.

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Woodstock Institute advances economic and racial justice within financial systems through research and advocacy across Illinois and the United States. Among their areas of focus are predatory lending, access to banking, debt collection, and municipal fines and fees