There’s an opportunity in every corner of the business sphere, and with the right capital, that opportunity can be realized. And, yet, it’s still incredibly difficult for small business owners to get a loan—and it’s next-to-impossible for minority and women owners to get the financing they need. Women-owned businesses (of all revenue brackets) are approved for loans 33% less than their male counterparts. And among small businesses, minority owners are denied loans approximately 42% of the time, while non-minority owners are denied financing only 16% of the time. 

Community banks and credit unions are in a prime position to help change the lending landscape. Using small business loan servicing software, you can make loans more accessible to minority and women business owners. Your bank already has strong community ties—but with an online lending process, you can focus on these underserved business owners even more and pave the way for new opportunities at every turn. Here are three factors that typically impede more diverse lending, and how your bank can mitigate them. 

How women and minorities get boxed out of traditional (in-person) lending

You see that women and minorities are less likely to secure the financing they need—but why is this? It all comes down to a few reasons that include:


  • Financial or business history. Minority and women applicants may have lower wealth or possess fewer assets (such as a home)—factors that are taken into account in most small business loan applications. A business owner’s full financial history may not be necessary for the smallest of loan amounts, but it’s still a determining factor in why some minority and women applicants get denied. 
  • Unconscious bias. To understand some of the inherent bias in face-to-face lending, simply look at how minority consumers receive loans. UC Berkeley researchers surveyed mortgage applications and rates for minority borrowers and found these consumers were often subject to higher interest rates—or rejection. The same can be said for small business lending, even if bias is completely unconscious. 


  • The fear factor. There’s such a heightened fear of rejection among minority- and women-owned businesses, a significant portion never seek financing at all, let alone step foot into a bank. In a survey from the U.S. Minority Business Development Agency, 33% of minority respondents chose not to apply for business loans out of fear of being turned down. 

These aren’t the only reasons that minority and women applicants might be turned away, but they’re some of the biggest ones. Loan origination software can help you offer small business funding to a wider pool of credit-worthy applicants, and help these businesses—and your loan portfolio—grow.

How technology can make your services more accessible

The new fintech landscape for small business lending is opening doors for minority and women applicants. Cloud-based software moves your small business loan application entirely online—which not only eliminates your team’s administrative burdens, but also removes unconscious bias from the process. Although your organization may be relationship-first, keeping the process as objective as possible can help minimize applicants’ fear of rejection and encourage them to apply. 

An inclusive approach to your online application also empowers minorities and women with the confidence they need to seek financing that can sustain and expand their business. Bolstering your local economy, diversifying the thriving businesses in your area, and giving greater breadth to your lending is a win-win strategy for everyone.