Loans.org Uncovers Major Shift in Minority Business Financing Patterns

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Through an interview with African American businesswoman and Inspirador CEO Dilia Wood, loans.org found that minority business owners are turning to crowdfunding after being discriminated against while applying for business loans through traditional avenues.

In a recent interview, business woman and CEO Dilia Wood told loans.org that traditional business loan sources may not be needed in the near future.

Wood, who faced discrimination while applying for an SBA 504 loan, said she believes crowdfunding will play a key role in assisting minority entrepreneurs. Organizations such as UNITE are forming to crowdsource funds specifically for under-represented minority entrepreneurs and artists.

Woods is a successful African American business woman, but her path to success was riddled with obstacles. She shared her story with loans.org, which became part of a comprehensive article examining racial discrimination in the realm of business loan financing.

In 2006, Wood applied for a business loan to purchase and renovate commercial real estate. She found that, for minority entrepreneurs, the world of business financing isn’t a level playing field.
Loans.org spoke with Wood, now owner and CEO of Inspirador, about her experience borrowing an SBA 504 business loan.

Wood says she was overcharged on certain fees and denied lending mechanisms common to most traditional business loans. As a result, she was overcharged and she never received certain promised reports. According to Wood, her legal counsel has uncovered similar cases involving the same lender.

Given her experience, Wood said she agrees with the findings of a 2010 report that found minority-owned businesses are treated unfairly in their efforts to secure business loans. The report, issued by the US Department of Commerce’s Minority Business Development Agency, stated that minority entrepreneurs are more likely to be charged higher interest rates or be denied for loans.

“Minorities, in some instances, tend to be greeted with subtle skepticism about being able to go through the lending process,” said Wood. “This serves as a barrier to capital and can be intimidating to potential minority start-up business owners.”

However, Woods believes that crowdfunding will change things for minority business owners.
“Anytime money is involved it is subject to inequality, whether known or unknown, but these alternatives, like crowdfunding, are important for leveling the playing field,” said Wood.

For the full article, please visit http://loans.org/business/articles/race-discrimination-minority-enterprises-crowdfunding

For additional information on business loans please visit http://loans.org/business.

About loans.org:

Loans.org is a leading lending authority website that covers financial news, produces informative articles, and answers frequently asked questions. In addition to providing lending-related information, loans.org also hosts a variety of free online application forms for prospective borrowers to use when applying for loans.

For more information, please contact:
Arit John
arit(at)loans(dot)org    
909-784-2468
Source: loans.org

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