With the world watching as jurors convicted a Minneapolis police officer for murdering George Floyd and our city mourns the killing of Daunte Wright by Brooklyn Center police, the Twin Cities continue to reflect on racism and the institutional failures that cause Black men to be brutally killed in our streets.
The roots of systemic racism in Minnesota run deep and stem largely from economic inequality, social inequity and marginalization. The poverty rate for Black Minnesotans is 27 percent, compared to 7 percent for non-Hispanic white Minnesotans. Decades of economic neglect in BIPOC communities, racial redlining and discriminatory banking practices have created a permanent underclass of Minnesotans.
As we reckon with the impact of racism in our community and hope for justice, we must also recognize the role economics and the financial industry plays in perpetuating a culture of division, stratification and poverty. One reason for this flawed cycle of disinvestment is the lack of financial access for BIPOC-owned small businesses, which create community wealth, community investment and well-paying jobs in our state.
Disparities minimize economic mobility
BIPOC business owners are extremely underrepresented in our state, and these businesses often lack the visibility and access to financial services that white-owned business owners take for granted. Traditionally, financial resources like small business loans have been designed largely for businesses with collateral or cash on hand. These disparities have minimized economic mobility among BIPOC Minnesotans who live and work in communities with economic challenges, creating a systemically unequal playing field.
More fair and equitable small business lending can help reverse this trend and support success and attainment for BIPOC business owners. Community Reinvestment Fund, USA (CRF), a Minneapolis-based nonprofit, mission-driven Community Development Financial Institution (CDFI), is making strides to improve awareness among BIPOC business owners that sustainable alternatives to traditional sources of capital exist.
Earlier this year, I had the privilege of testifying before a state legislative committee regarding the racial wealth divide prior to the pandemic, the impact the pandemic has had on BIPOC small businesses, and equitable paths forward. The reality is that we need to reimagine small business finance for local small businesses that will require public and private support to close the disparity gaps and usher in true transformative change.
Additionally, we need to reimagine the small business lending ecosystem through a lens that prioritizes equity and access while building greater awareness of the power BIPOC-owned businesses have to transform our economy. Communities are more equitable and stronger when the business community reflects the people it serves.
We need productive connections and collaboration
We must work together – the private sector, public officials, BIPOC business and community leaders, and the finance industry – to create unique, community-specific solutions for empowering BIPOC-owned small businesses in Minnesota and the Twin Cities. Collaborative partnerships like The Catalyst Coalition, a new-age collaborative of local CDFIs – nonprofit, mission-driven organizations dedicated to community finance – including Northside Economic Opportunity Network (NEON), Metropolitan Economic Development Association (MEDA), The Latino Economic Development Center (LEDC), African Economic Development Solutions (AEDS), and CRF; or the Destination Northside Coalition, and the Lake Street Rebuild and Reimagine Coalition are examples of productive connections being made in our cities.
While the current economic crisis and racial reckoning have further revealed deeply rooted social inequities, it has also heightened attention to these disparities and highlighted the role we all play – inside and outside of the financial services sector – in empowering BIPOC communities to achieve financial stability, sustainability and success.
Much more needs to be done, but despite the discord we see and feel in the Twin Cities today, change is at hand.
Anisha Murphy, Esq., is Twin Cities Director of Community Advancement for Community Reinvestment Fund, USA (CRF), a Minneapolis-based mission-driven lender and CDFI. A native of Minneapolis, Murphy has dedicated her career to the pursuit of equity, justice and community improvement. She is an adjunct professor at Hamline University and Mitchell Hamline Law School, where she earned her Juris Doctor degree in 2013 and her Masters of Public Administration in 2016.
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