Black women entrepreneurs: An exploration of the structural factors driving the financial capital access gap

While Black women entrepreneurs have the highest nascent entrepreneurship rates, they also significantly underperform their White counterparts. As some scholars have argued, the primary cause of this disparity may result from differences in access to financial capital. Utilizing a stratification economics lens, this chapter analyzes the root causes of the financial capital access gap among Black women entrepreneurs. Wealth, discrimination by financial institutions, credit history, student loan debt, negative social capital, lack of support and perceptions of illegitimacy from social networks, and family structure disadvantages are identified as structural factors driving the financial capital access gap. It is further argued that the COVID-19 pandemic will exacerbate some of these conditions. Policy recommendations are made, including increased non-traditional lending models such as character-based and forgivable loans, greater transparency of race in lending through the implementation of Section 1071 of Dodd-Frank, and student loan amnesty