Next City, November 13, Economics in Brief: America’s Red and Blue Political-Economic Divide is Not Going Away
Lending Institutions Continue to Discriminate Against Minority-Owned Businesses
According to a mystery shopper test, National Community Reinvestment Coalition (NCRC) revealed that federal Paycheck Protection Program (PPP) lenders were in violation of Equal Credit Opportunity Act (ECOA) even after being made aware of discriminatory practices.
During the last two weeks of the year that PPP loans were available to businesses impacted by the pandemic, NCRC conducted the undercover testing of 47 different financial institutions. The study was intended to follow up a previous study that revealed discriminatory behavior of financial institutions towards minorities and women business owners, to see if changes had been made.
The testing, carried out by 60 Hispanic, Black and white testers reaching out to the same institutions with the same financial requests, showed that white testers were favored over Black female and Hispanic male testers by 35 percent, or 21 out of the 60 applicants, even when the testers of color had stronger financial profiles. Black female and Hispanic male testers received less information about the loan products than white male testers, and Black female testers were given less information than white and Hispanic female testers.
