Less than half of Britain’s Black business owners – 43 per cent – trust banks to support their interests, a new survey has revealed.
Moreover, only around a quarter (27 per cent) of Black business owners have confidence in the UK government to offer support in their undertakings, according to research from the Black Business Network sponsored by Lloyds Bank and undertaken by Savanta.
These fraught relationships are influencing borrowing habits among this cohort; they are far more likely to be self-financed (34 per cent) than use financing from banks (13 per cent).
As a result, Black entrepreneurs are not only missing out on financial support from traditional lenders, but also access to mentoring and business networks that banks can provide.
Speaking to The Independent, Lloyds Banking Group Black Advisory Board Member Nathaniel Peat said: “In an ideal world, access to funding would be equal, assistance to get going would be level and bank managers would be culturally competent to treat all business owners the same.
“Unfortunately, this survey has highlighted a feeling that many Black entrepreneurs have shared for years; the effect of this and other racial barriers weighs more heavily on them than other groups.”
Reasons cited for the lack of confidence in sources of support include lenders’ failure to understand Black culture and lived experiences (79 per cent).
The way that Black entrepreneurs are treated is also another reason for these findings; more than half (53 per cent) of Black business owners have experienced negative societal discrimination.
Mr Peat is calling for “infrastructural changes” across these financial institutions to redress the balance.
“In order for us to level the field, rebuild trust and ensure equality we will require fundamental infrastructural changes amongst the financial institutions,” he explained.
“These institutions require a holistic approach to yield a lasting change and it’s essential that we understand all the factors that contribute to the barriers black entrepreneurs face.
“With this understanding we can charge forwards with innovative strategies to knock the obstacles down, leaving a legacy that future generations can benefit from.”
More than 800 participants from Black communities in Britain completed the survey, the majority (65 per cent) of which were female.
Despite feeling alienated by the main institutions in the UK, the ‘Black pound’ holds significant value, with firms owned by people of African and Caribbean origin contributing £25 billion annually to the British economy, according to this study.
On that note, the organisers behind Black Pound Day opened a pop-up retail store in Westfield London on Saturday to encourage people to support and invest Black-owned enterprises.
Shari Leigh, founder of the Black Business Network, said: “For the Black business community these findings are nothing new. The legacy of Britain’s ties to the slave industry and unaddressed structural racism remain at the forefront of conversations within the Black community.
“It’s commonplace to balance the idea of want versus need when engaging with traditional financial institutions, questioning the importance of our feelings and visibility. It just shouldn’t be this way.
“We use, work for and contribute to these institutions and we should be seen and heard. This research is important because it quantifies Black business communities’ unapologetic thoughts and experiences and outlines tangible steps that Lloyds Bank and other institutions can take to address this lack of trust in real, tangible ways.”
Based on the survey, Lloyds Bank worked with their Black Business Advisory Committee to create a set of recommendations to increase the trust of Black business owners.
These include partnering with local communities to gain trust, collaborating with schools and universities to encourage entrepreneurship and creating a bespoke mentoring programme.
Paul Gordon, Managing Director, SME and Mid Corporates, Lloyds Bank Commercial Banking said: “These findings make uncomfortable reading, from which we cannot and will not shy away.
“Banks have a vital role to play in creating a more diverse and inclusive business community in the UK which will benefit the country. We know we still have a long way to go, and this is not an easy fix or a matter of better signposting what we do. We are committed to large-scale change and collective action to help pave a way for Black-owned businesses to thrive.”
The Government has been approached for comment.
Entrepreneurs from the UK’s ethnic minorities generally do less well than their white counterparts, despite putting in more time and money and being better qualified, a previous study found last year.
It also showed that small businesses run by Black men have been worse hit by the Covid-19 pandemic than other groups.
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