According to a $50 million lawsuit filed by Diamond Ventures, the Small Business Administration is discriminating against black business owners. The SBA, which is set-up to aid, counsel and protect the interest of small businesses, have historically denied black businesses funding that is backed by government guarantees.
The lawsuit states that black owned businesses received only 2.55 percent of SBA approved financing, only .49 percent of SBA dollars went to black owned businesses and two of 350 licensed managers in the Small Business Investment Company program were black.
Although blacks are more likely to start a business than whites, black owned businesses have the lowest survival rate of any ethnic group. Because only six percent of black owned businesses obtain bank loans, most black business owners are forced to use credit cards and mortgage refinancing to start a business. And due to the accumulation of debt and the lack of funding, only 39 percent of black businesses survive beyond four years. –a.r.
