Black-owned businesses face the highest loan denial rates, exposing persistent disparities in access to capital for minority entrepreneurs
The doors of opportunity remain locked for too many. A new LendingTree analysis reveals that Black-owned businesses faced the highest rejection rate for financing in 2024, with 39% denied loans, lines of credit, or merchant cash advances. Hispanic-owned businesses followed at 29%. By contrast, just 18% of white-owned businesses were turned away.
The figures draw a map of inequality, where capital flows freely to some and is dammed up for others. The report shows that one in five businesses overall—21%—were denied financing last year, a number nearly unchanged from 2023. But beneath that flat surface lies a story of disparity: while white-owned companies hit roadblocks less often, Black and Hispanic entrepreneurs carried the brunt of rejection. Size and age also stacked the deck. Firms with just one to four employees were denied 26% of the time, five times the rate of larger firms. Startups fared poorly, but even businesses with three to five years under their belts faced the highest denial rate, at 29%. By loan type, SBA loans and lines of credit proved the hardest to secure, with nearly half—45%—rejected.
The reasons mirror a harsh economy. High interest rates, inflation, and an unsteady job market have made banks wary. Community development financial institutions, often praised as a lifeline for underserved communities, turned down applicants 34% of the time. Large banks followed at 31%. Matt Schulz, LendingTree’s chief consumer finance analyst, said the trend is part of a larger retreat by lenders. “Inflation, tariffs, high interest rates, and a slow job market are making things tough on small businesses and the customers they’re trying to attract,” he said. “ this uncertainty, banks pull back—as they tend to do in risky, unpredictable times. Standards for lending to consumers and businesses have generally been tight for some time, and that’s unlikely to change soon.”
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