Black and Asian businesses were unable to access Covid support, MPs say
Nearly two-thirds of black and Asian business owners felt unable to access state-guaranteed loans and grants at the start of the coronavirus pandemic – leaving many on the brink of financial ruin, suggest research conducted for MPs.
Britain’s 250,000 minority-owned businesses contribute £ 25 billion to the economy each year, but have been disproportionately affected since the start of the crisis according to an investigation by a committee of multi-party deputies and the Federation of Small Businesses.
About 68% of the 500 respondents said they could not access government financial support, according to data obtained exclusively by The Telegraph. Meanwhile, 65% said the information provided was not clear enough, complaining that it was too general and did not take into account cultural differences.
A large number of minority-owned business owners said they could not access grants and loans through the aid program, either because they were rejected or because of strict qualification criteria and a lack of information on what aids are available and how to access them.
These factors were compounded by the fact that many minority business owners do not use the big traditional banks, and in some cases those interviewed said they were forced to pay intermediaries to complete the formalities. forms needed to apply for Chancellor Rishi Sunak’s emergency loan programs.
Racial justice activists argue that the system is designed to exclude minority business owners due to historical and entrenched inequalities and discriminatory practices in the banking industry.
A government report in 2012 found that banks were not doing enough to extend business financing to credit-poor minority communities.
The revelations raise new questions about the crisis lending efforts, and come a day after the National Audit Office warned taxpayers could face £ 26bn in losses on issued debt due to bankruptcy and fraud.
Banks and other lenders have distributed £ 57bn in support through programs such as the Bounce Back loan program, backed by guarantees that public money will cover all or part of their losses in the event of default. a borrower.
As the government called on banks to ease strict funding rules during the pandemic, minority business owners said they noticed little change and it choked their access to much-needed cash.
Research by MPs also found that due to the historical mistrust of some minority groups in banks, black and Asian-run businesses did not seek loans or aid at the same rate as their counterparts. white.
Even when they asked for support, they were much less likely to receive it, MPs said.
Black victims of fraud are more than twice as likely to be denied a refund by their bank than white customers, for example, while African black businesses are four times less likely to be approved for loans, and all minority groups are subject to higher interest rates. .
Banks do not have a solid track record of supporting companies run by BAME, according to the report.
“British banks have a problem of racial discrimination,” said Kehinde Andrews, a British scholar specializing in Black Studies. “It’s time they admit it.
This lack of access to financial support has pushed some minority business owners into riskier avenues such as super high interest payday loans.
Black and Asian Britons are already bearing the brunt of the public health crisis, and are up to four times more likely to die from the virus than their white counterparts.