UK banks 'shun black start-ups'

Minority-owned firms account for a growing proportion of the total

Black entrepreneurs find it more difficult to raise start-up finance from banks than their white or Asian counterparts, according to a new report.

Just 21% of black entrepreneurs received start-up finance from banks, compared with 34% of white or Pakistani entrepreneurs, and 49% of Chinese business owner-managers, the report commissioned by the British Bankers Association said.

The authors of the study said they could not prove the disparity was because of racial discrimination.

But, they added: "There is clear evidence of disadvantage which cannot be explained in terms of other characteristics of the businesses or their owners."

Collateral

The report suggests that the disparity in access to bank finance could also reflect the fact that black entrepreneurs are often less able to offer security against loans.

It added that banks may also be reluctant to provide start-up money to black-owned firms because they tend to concentrate on areas which do not yield high profit margins.

The BBA said retail banks should do more to win customers among minority-owned businesses, as these account for a growing proportion of the total.