Black Paper 3.1

The Inclusive Capital Collective, along with member and primary author Community Credit Lab, has published a Black Paper calling for the revolution of relationship-based lending.

Executive Summary


In the U.S. financial system, the primary goal is to accumulate capital. But, what if the goal was to share capital and support others equally to build wealth?

Data from a 2021 credit survey shows that white-owned small businesses are twice as likely to be fully approved for financing than small businesses owned by entrepreneurs of color. Further, in the event that businesses run by people of color are able to access loans, they pay higher interest rates on average as compared to white-owned small businesses. So, not only are businesses owned by people of color less likely to be funded at the level that they need, but they also will be paying more for this capital. The economic cost of these practices are high. As a 2020 Citibank report noted, just for Black-owned businesses the lack of fair and equitable lending opportunities over the last 20-years has locked these same businesses out of $13 trillion in revenue that they could have invested in their businesses and communities.

Exclusion and extraction are deeply rooted and reinforced in the financial system, by design. The multigenerational history of racially discriminatory behavior, practices, policies, and systems persist in denying wealth-building opportunities to Black people, Indigenous people, and People of Color (BIPOC). Many solutions in the market today are not created in conversation with these populations. These solutions also do not questionthe financial system’s original goal of capital accumulation. As a result, these financial products perpetuate the lack of access to resources and affordability of capital in historically underestimated communities.

This Black Paper argues that how we lend, as well as the cost of that capital, are essential components to solving inequitable lending. And what is at the core of this is the recognition that we, as people and planet, are interdependent. Solutions that we develop to reduce inequality need to recognize, account for, and aim to reverse structural imbalances that continue to be perpetuated by mainstream frameworks and pricing methods to disburse capital.

The Inclusive Capital Collective, 2021