The Breakdown You Need To Know:
Trying to make a dollar out of fifteen cents has only been getting harder for Black-owned businesses in need of capital injections. CultureBanx reported that most Black-owned businesses are usually sole proprietorships earning less than $1 million in annual revenue, which means they are not prioritized by large commercial banks such as JPMorgan Chase JPM -2.5%, or Wells Fargo WFC -2.2% with both banks boasting $1.9 trillion or more in assets under management. Now that City First Bank and Broadway Federal Bank have combined, lending to communities of color should be more abundant since it will have about $850 million in deposits.
“If you are providing financing for a small business, you are enabling wealth creation, job creation and economic empowerment through that financing. There’s a multiplier, said City First CEO Brian Argrett.” He will serve as CEO of the newly formed entity, while Broadway Federal CEO Wayne-Kent Bradshaw will become chair of its nine-member board.
Banking While Black:
When low-income people are denied traditional bank services they are left vulnerable to costly check-cashing outlets, pawnshops, and other predatory services. It’s imperative these communities receive access to the aforementioned banking services. According to the FDIC there are 21 Black-owned banks in the U.S. currently serving communities of color, with assets totaling $4.85 billion. The two biggest institutions used to be Carver Federal Savings Bank and OneUnited, both have more than $650 million in assets and offer some free account services.
Streaming Goes #BankBlack:
Earlier this year Netflix NFLX +1.1% became the largest company on record to significantly support African American economic development by diverting $100 million into Black-owned banks to help close the racial wealth gap. This wave of support should be a game-changer for this demographic both commercially and personally, as 19% of Black families have either negative wealth or no assets at all. The streaming giant’s initial investment will help cover bridge loans, participation loans and bank deposits available to African-American borrowers across the country.
African Americans hold only 2.6% of the nation’s wealth although making up 13% of the population. Additionally, the U.S. is home to approximately 2.5 million Black-owned businesses and if companies invested at least 1% of their profits in underserved communities, amounting to more than $20 billion in cash, the racial wealth gap could close within a decade.