Why Black-Owned Businesses Still Struggle to Get Capital

The Census Bureau estimated 194,585 Black-owned employer businesses in 2022, generating $211.8 billion in annual receipts and employing about 1.6 million people. Brookings reports that the number of Black-owned employer firms surpassed 200,000 in 2023 after growing 62% from 2017.

Growth does not erase financing friction

The Federal Reserve Banks' 2025 race-and-ethnicity chartbook found that 35% of Black-owned applicants seeking loans, lines of credit or merchant cash advances were fully approved, compared with 56% of white-owned applicants. Thirty-nine percent of Black-owned applicants were denied.

Those survey differences are descriptive. They do not, by themselves, identify a single cause and should not be read as an experiment that controls every factor affecting underwriting.

Capital affects more than survival

Businesses use financing for payroll, equipment, inventory, marketing, real estate, acquisitions and expansion. When capital is expensive, partial or unavailable, a viable business can grow more slowly or miss opportunities that require cash before revenue arrives.

That makes financing access part of the competitive environment.

The answer is not one lender

A durable capital strategy can include bank credit, CDFIs, supplier terms, government procurement, equity, revenue-based financing, grants where appropriate and stronger financial reporting that makes the company easier to underwrite.

The system problem still needs system attention. The business owner also needs a practical capital stack that does not depend on one door opening.