Access to affordable financing is often key to business success. But some businesses face barriers to securing capital and other crucial resources. Minority-, women-, veteran- and LGBTQ-owned small businesses can be especially affected.
While these groups play a pivotal role in our economy, they also face real economic hurdles, which extend far beyond business ownership.
To understand the disparities, consider this:
- Among startups, Hispanics and Blacks are significantly underrepresented. Hispanic people make up 18% of the U.S. population but only 7% of startup owners, while Black people account for 12% of residents but only 3% of entrepreneurs.
- Women are underrepresented too. While they account for 51% of the U.S. population, they only make up 33% of business owners who have employees.
- Many veterans face financing challenges. In a survey of entrepreneurs who are veterans, 34% reported being turned down when they applied for business financing.
- The LGBTQ community is disproportionately affected by poverty. An estimated 22% of LGBTQ adults are living in poverty compared to 16% of non-LGBTQ people.
A Focus on Underserved Businesses
The roots of economic inequality are complex. But creating greater access to financial services is an important step forward.
Launched in 2021, Amegy Bank’s Small Business Diversity Banking Program was designed to improve access to capital for businesses owned by minorities, women, veterans and LGBTQ individuals. The goal is economic inclusion.
“It’s doing the right thing. That’s good business.”
“We saw disparities in credit approval rates for different groups,” explains Jevaughn Sterling, Executive Vice President, Regional Commercial Banking Manager with Amegy Bank in Houston. “We believe our ability to help more people participate in the mainstream banking system can address some of our most pressing social challenges.”
The Small Business Diversity Banking Program isn’t a grant program. It’s a unique business lending program designed for eligible business owners who may not qualify for other forms of business financing.
As a Special Purpose Credit Program authorized under the Equal Credit Opportunity Act, this program provides wider access to loans and lines of credit1 through expanded eligibility standards.
“We’re offering a new alternative that is fully underwritten by the bank,” Sterling says. With greater flexibility, Amegy’s team can better support business customers that face common obstacles to securing business financing, such as having a lower credit score, lacking sufficient liquidity outside their business or working in certain industries. “This program gives us expanded room to make approvals,” he says.
An Advocate for Business Owners
For business owners, working with Amegy’s Small Business Diversity Banking Program isn’t just a transaction. It’s a relationship.
“We mind our customer’s business,” Sterling says. “We’re interested in a relationship that goes beyond the dollar amount of a loan. It starts from a need-based standpoint.”
He explains that Amegy’s business bankers are advocates for the customer to find an appropriate financing option, whether it’s a traditional business loan, a loan with customized credit standards, SBA, or other financing options.
Sterling emphasizes that lending isn’t one-size-fits-all. The Small Business Diversity Banking Program is meant to expand the options available to small-business borrowers.
On top of exploring available financing options, Amegy’s bankers can also support small-business customers by providing technical assistance to help make their business more bankable and helping them prepare their loan request. They also work closely with Amegy’s community partners to help local businesses access other resources when necessary, such as microlending and other nontraditional funding options via Community Development Financial Institutions (CDFIs).
“We see ourselves as our customer’s advocate, Sterling says. “We want to better understand their needs so we can better advocate for them.”
A Greater Impact
By championing economic opportunities for underserved businesses, the Small Business Diversity Banking Program helps more business owners cover crucial business needs, from funding startup costs to meeting payroll, buying equipment and securing their place of business.
Beyond helping an entrepreneur run their business and provide for their family, programs such as this can create a ripple effect: As these businesses grow, they help increase local prosperity through employment, a strengthened tax base and more financial support for local organizations.
“By helping more underserved business owners access traditional financing, we help drive economic growth in our communities,” Sterling points out. “A bank is only as strong as the community it serves.”
In support of Amegy’s local focus and its goals for promoting diversity, equity and inclusion, the Small Business Diversity Banking Program embodies one of Amegy’s core principles as a bank: that everyone counts.
Sterling puts it simply: “It’s doing the right thing. That’s good business.”
Here for You & Your Business
If you identify as someone in one of the groups covered by Amegy’s Small Business Diversity Banking Program, we encourage you to learn more about this unique program and contact a banker to discuss your business needs.