In communities of color, Black banks are often the only source for non-predatory lending. And because they practice relationship banking—a holistic system of lending that looks beyond credit scores to understand comprehensively applicants’ financial situations—they are a vital and singular lifeline for Black entrepreneurs and households, which are at once underbanked and overcharged by the mainstream financial services sector.

According to the Federal Reserve, 49 percent of American Black households were unbanked or underbanked in 2019, compared to just 15 percent of white families. It’s a function of lack of access.

In majority-white counties, there are 41 financial institutions for every 100,000 people. In communities of color, there are just 27 for every 100,000. The lack of access to basic financial services has forced Black households to rely on costly alternatives like check-cashing services, payday loans, money orders, and prepaid credit cards. Over a financial lifetime, those fees can total upwards of $40,000.

At the same time, Black Americans are rejected for credit at twice the rate of whites, according to the US Census Bureau’s Annual Survey of Entrepreneurs. And when they are offered credit, non-white applicants who are equally or more qualified than white counterparts are 62.5 percent more likely to be offered higher-cost loans. On average, non-white borrowers pay $2,662 more than white borrowers per auto loan.

The Black Bank Foundation will ensure that Black entrepreneurs and families can have equitable access to capital by shoring up the banks right the corner.