Banks Move to Close Racial Wealth Gap, Foster Minority Entrepreneurship

A few, major U.S. banks are not only voicing solidarity with communities of color, they are putting money toward eliminating racial injustice and the wealth gap. 

Bank of America has pledged $1 billion over the next four years to fight racial inequality, of which $250 million will go to assist small, minority-owned businesses through support to community development financial institutions (CDFIs). The $1 billion commitment aims to help communities of color who are suffering disproportionately from the pandemic. 

Boston-based Berkshire Bank, meanwhile, has joined forces with a nonprofit to launch a loan pilot program to jump-start minority entrepreneurship. Compared to white households, minorities have vastly fewer resources to start a business, noted the bank, touting $13.2 billion in assets. “When we looked at the wealth gap, we found a couple ways families get on that ladder: home equity, homeownership and business ownership,” Malia Lazu, Berkshire’s chief culture and experience officer, told American Banker. “How do we grow capital in order to support minority businesses, in order to think about homeownership? One leads to the other.” 

Additionally, the Minneapolis-headquartered U.S. Bancorp (“Bank”) has announced its putting $116 million toward addressing racial inequality in its markets. U.S. Bank aims to increase efforts to support small and minority-owned businesses that create jobs and build a social infrastructure that leads to long-term economic success. The bank plans to rebuild and reinvest in housing and retail commercial businesses in impacted areas and intends to launch a $1 million CDFI partnership program to award grants and commercial loans to organizations that qualify.

“We chose to serve these communities, and we will not turn our backs or abandon the neighborhoods where so many are hurting right now. We will continue to provide jobs, banking services and financial education in the areas that have been traumatized during the past week,” Andy Cecere, chairman, president and CEO of U.S. Bank, said on the heels of the George Floyd tragedy.

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