A minority business owner can have a perfect credit score and a great business, and still be twice as likely to get a loan rejection.
April 15, 2026
Original Paper
Barriers to Capital: Financial Access & Business Outcomes Among Minority Entrepreneurs in Northern New Jersey
SSRN · 6511538
The Takeaway
We often assume that 'the market is blind' and that if you have the numbers, you get the loan. This study of Northern New Jersey proves that's not true. Even when you control for every possible metric of business quality, minority-owned firms are 2.4 times more likely to be denied. This isn't about risk; it’s a hard-wired exclusion based on racial identity that persists even when banks are healthy. For regular people, this means the American Dream of building a business has a hidden 'identity tax' that no amount of hard work can erase.
From the abstract
Minority-owned small businesses in Northern New Jersey operate within a financial framework that restricts access to institutional capital; however, the specific causal mechanisms underlying this exclusion are insufficiently identified in current literature. This study utilizes quasi-random variation generated by merger-driven bank branch closures between 2017 and 2020 as a natural experiment to establish a causal relationship between the withdrawal of banking infrastructure and the six-month su