Silicon Valley Bank’s recent collapse has reignited concerns about lending discrimination in the banking industry, especially when it comes to people of color. Venture capitalist Arlan Hamilton, who founded Backstage Capital, stepped in to help some of the startup founders of color who panicked about losing access to payroll funds. However, such options for those startup founders are limited, as minority business owners have long faced challenges accessing capital due to discriminatory lending practices. Asya Bradley, an immigrant founder of multiple tech companies, said she joined a WhatsApp group of more than 1,000 immigrant business founders following SVB’s collapse. Many women, people of color, and immigrants opt for community or regional banks like SVB, as they are often rejected from the “top four banks.” However, the top four banks have committed millions of dollars since 2020 to address economic and racial inequality. Black-owned banks work to close the lending gap, but they have far fewer assets at their disposal than the top banks. As a solution, entrepreneurs also seek funding from venture capitalists. Backstage Capital invests in new companies led by underrepresented founders, especially women, people of color, and LGBTQ individuals. Founders like Hamilton remain optimistic that community banks, regional banks, and fintechs will stand up and address the challenges faced by underrepresented communities.
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