How can women and minority business owners ensure they get a fair assessment when applying for an SBA loan? Unfortunately, bias still persists, and in some cases can discourage owners from pursuing funding that would prove useful.
American Banker recently made the case for technology to level the playing field. According to a new story, younger businesses in the loan space are looking at ways that algorithms and automation might improve lending rates for women.
The argument goes that humans will always have unconscious biases at play when deciding whether or not to award a loan. A process that takes that human bias out of the equation could theoretically offer fewer individual opinions that influence lender decisions. Various experts referenced in the source noted the issues impacting women business owners, one of these being Office of Capital Access Associated Administrator at the SBA Erin Andrew.
"Younger businesses in the loan space are looking at ways that algorithms and automation might improve lending rates for women."
"The challenge for women-owned businesses is 90% don't have employees, they're individually run, independently owned businesses," she said. "Generally if you have employees, you're more likely looking to leverage capital, you're growing, you're accessing loans, you're having an impact on your community."
Obviously, it isn't just women who face possible bias when looking for loans. A 2013 SBA study found that African-Americans and Hispanics invested "about half the capital" of White people between the years 2007 and 2010. This could reflect a lack of access to funds, denial or a number of other factors.
Although the promise of automated algorithms is great, owners can also trust firms like Growth Capital to provide good creative financing that helps your business no matter your background. Register here to learn more about the different programs that we offer, from the Community Advantage and SBA 504.