12:53 PM / Saturday April 1, 2023

1 Apr 2012

SBA loan data can help focus on minority-owned businesses

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April 1, 2012 Category: Color Of Money Posted by:

By Rosland Gammon


After analyzing 20 years of Small Business Administration loan data, Bryant Ruiz Switzky of the Washington Business Journal found the number of business loans to African Americans dropped 87 percent between 2007 and 2011. That figure became part of a package of stories called Impossible Dreams. The stories explore the reasons behind the decline as well as practices, such as lenders disregarding borrowers’ business plans, that contributed to a large default rate among loans to African American business owners.


“One of the reasons no one writes about this issue is because nobody is paying attention,” Bryant says. “Nobody is paying attention because there is no data to pay attention to.”


Bryant’s FOIA request to the local SBA district generated spreadsheets with 80 columns of data, he says. He narrowed the columns and created a pivot table with gross loan amounts, date and ethnicity to find patterns.


“There’s a lot of rich info about borrowers,” he says.


Narrowing the data down to ethnicity and lending institutions led him to an SBA program called Community Express, which generated the most loans in the African American business community. That led him to a lender that profited from the smaller loans before being seized by regulators.


“The threads you pull out can lead you in different directions,” he says.


Bryant also suggests using Community Reinvestment Act data to determine where small business loans go. It requires large banks to provide annual reports on the number of business loans made for less than $1 million and the total value of those loans, Bryant says. It also requires banks to break the data down by Census tract and county. The downside is the CRA information is based on 2010 census tracts, Bryant says.

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