Only 43% of Black entrepreneurs have trust in banks, according to research from the Black Business Network, which was sponsored by Lloyds Bank and undertaken by market researcher Savanta.
The Black. British. In Business & Proud report, which involved 800 participants from Black communities in Britain where the majority (65%) were female, found “a trust gap” among the Black business community concerning banks and the Government.
Black business owners are more likely to be self-financed (34%) than use financing from banks (13%), meaning they’re missing out on access to mentoring and the business networks they provide. In comparison, only 27% said they trust the Government to have their best interests in mind.
The report found the reasons for avoiding banks include “the importance Black business owners place on sources of support understanding their culture and lived experience” (79%). However, poor treatment is a factor too, where more than half (53%) of Black business owners surveyed have experienced “negative societal discrimination” in their interactions with banks.
The findings are concerning for Black entrepreneurs from an equity perspective and a commercial one. Businesses owned by people of African and Caribbean origin contribute around £25 billion annually to the British economy. As such, they could benefit from better access to bank services to further their contributions.
Based on this research, Lloyds Bank has worked with their Black Business Advisory Committee to create a set of recommendations to increase trust in these institutions among Black business owners.
Their recommendations include a ten-point plan which is outlined below:
- Improve cultural awareness and Black representation in banking.
- Partner with grass roots and local community organisations to gain trust.
- Provide ringfenced support to create equity.
- Provide opportunities to improve knowledge and skills core to entrepreneurship.
- Create a central hub of support available from trusted sources.
- Collaborate with schools and universities to encourage entrepreneurship.
- Provide networking opportunities.
- Create a bespoke mentoring programme.
- Promote the support that is available and relevant case studies.
- Provide fair and equitable opportunities to be part of supply chains and the business ecosystem.
Shari Leigh, Founder of Black Business Network and member of the Black Business Advisory Committee, said: “For the Black business community, these findings are nothing new. The legacy of ties to the slave industry and unaddressed structural racism remain at the forefront of conversations within the Black British community.
“It’s commonplace to balance the idea of want versus need when engaging with traditional financial institutions, questioning the importance of our feelings and visibility. It just shouldn’t be this way.
“We use, work for and contribute to these institutions, and we should be seen and heard. This research is important because it quantifies Black business communities’ unapologetic thoughts and experiences and outlines tangible steps that Lloyds Bank and other institutions can take to address this lack of trust in real, tangible ways.”
Paul Gordon, Managing Director, SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “These findings make uncomfortable reading, from which we cannot and will not shy away. We’re taking steps to better understand the needs of Black colleagues and customers through our Race Action Plan and by working with our partners, including the Black Business Network, Foundervine, and the Black Business Advisory Committee.
“Banks have a vital role to play in creating a more diverse and inclusive business community in the UK, which will benefit the country. We know we still have a long way to go, and this is not an easy fix or a matter of better signposting what we do. We are committed to large-scale change and collective action to help pave the way for Black-owned businesses to thrive.”
To read the Black. British. In Business & Proud report in full, click here. To find out more about the Black Business Network, click here. To access Lloyd’s hub for supporting Black-led businesses, click here.