Chief executive Segun Idowu of the Black Economic Council of Massachusetts. Photo by Suzanne Kreiter courtesy the Boston Globe.
The Black Economic Council of Massachusetts (BECMA) and the influential Boston Foundation are putting their combined political muscle behind a state-owned public bank. Jon Chesto reports in the Boston Globe:
“Worried that Black-owned businesses will be left behind in the recovery after the COVID-19 pandemic, [BECMA] is pushing for the formation of a state-backed lending institution that would help provide low-cost financing and close some of the longstanding inequities in the economy.”
On May 20th, the Boston Foundation with the Coalition for an Equitable Economy released a comprehensive report, The Color of the Capital Gap, that examines the disparities in access to credit between white-owned small businesses and those owned by people of color. The report highlights that only 10 percent of small business loan dollars goes to a diverse neighborhood although nearly 20 percent of Massachusetts entrepreneurs are people of color, and that more than half of entrepreneurs of color are unable to stay in business long-term, often due to unmet capital needs. The report’s solutions include establishing a public bank that could partner with other lenders to expand access to capital.
The Globe article quotes BECMA’s chief executive, Segun Idowu:
“There’s clearly a structural racism problem in the industry. I know different leaders are working on trying to correct it at their own banks … We all need to transform the entire industry. That’s why the public bank is one of the issues that we’re championing.”