The Racial Wealth Gap
in America

Small businesses are the bedrock of our economy.
They’re also helping to bridge the wealth gap in America.
Here’s how.

The Racial Wealth Gap in America

Small businesses are helping to bridge the wealth gap in America. Here’s how.
Small businesses are the bedrock of our economy. They’re also helping to bridge the wealth gap in America. Here’s how.

Published June 6, 2022

The Racial Wealth Gap in America

There is a clear and widening wealth gap in America that disproportionately affects minorities and people of color. According to the Federal Reserve, the average Black and Latino or Hispanic household earns only half as much as the average White household.

Further, Black and Latino or Hispanic households hold only 15-20% of the net wealth of the average White household. This is known as the racial wealth gap. It plays a large role in America’s overall economic inequality, and has remained consistent since 1970.



By the Numbers: The Racial Wealth Gap

  • Black Americans can expect to earn up to $1 million less than White Americans over their lifetime. Source

  • White Americans with an advanced degree, on average, make 19% more than Black Americans. This gap is slightly smaller among LatinX, with White Americans earning 14% more. Source

  • The median household income of Black Americans, as of 2019, was $24,100. Meanwhile, White households hold an average median income of $142,500. Source


Economic inequality in America stems from several issues, including wealth inequality, income inequality, and unequal lending opportunities for Black and minority business owners.

While it has become something of a hot-button issue in recent years, the wealth gap is an issue that has existed and grown over decades. The racial wealth gap widened dramatically alongside America’s overall economic inequality during the COVID-19 pandemic.

With so many families across the United States already facing barriers to owning and growing their wealth, the economic implications of the pandemic were most felt by Black and Hispanic households.

The numbers might feel overwhelming, but there are a number of things that you can do to help close the racial wealth gap. Chief among them? Starting your own business.


The Benefits to Small Business Ownership

Bridging such an extensive gap in income and wealth can feel insurmountable, but the creation and support of small businesses has the potential to effectively shrink the gap. Homeownership has often been touted as one of the most efficient ways to build lasting wealth in America, but business ownership is now considered the “second solution” to building wealth. According to the U.S. Small Business Administration (SBA), a substantial amount of family wealth lies in business ownership.

Small business growth doesn’t just help build wealth for the owner and his or her family — it impacts the overall economy and is an important building block in bridging the wealth gap. Whether you’re starting your own business, investing in one, or even supporting one in your local community, you’re doing your part to build wealth and create jobs.


Building Wealth for Families and Community Members

According to the SBA, on average, the self-employed are wealthier than the non-self-employed. This is even more true for Black business owners. According to a 2018 report, Black business owners have 12 times more wealth and higher wealth mobility than Black non-business owners.

Building minority- and Black-owned small businesses benefits the economy as a whole. In addition, it helps to close the racial wealth gap. Owning a business can help people transfer wealth to their families over time, and with increased wealth comes increased opportunities for economic mobility and growth.

The money spent at small, locally owned businesses is also more likely to recirculate within that community. Plus, small businesses help increase employment in local communities.

If you, or someone you know, is interested in starting or growing a business, there are a number of resources that can help.


M&F Bank: A Legacy of Supporting Local Economies

The widening of the wealth gap impacts entire communities and weakens the US economy. Since our founding, M&F Bank has been committed to supporting small business owners on their journey to creating wealth for themselves, their families, and within their communities.

We have a history of providing small businesses access to capital and making business lending decisions that help support our local communities. We participated in each round of the Paycheck Protection Program (PPP) and in 2021, we were honored to close over 630 loans in the markets where we operate, in addition to 81 cities that extend beyond our footprint. 65% of PPP funds disbursed by M&F Bank went to minority-owned firms.

Supporting local businesses in our communities has always been an essential part of our business, and we continue on this mission today.


Continuing to Invest in Our Local Communities

At M&F Bank, we continue to commit ourselves to providing access to capital for small and medium-sized businesses with the goal of building community wealth and reducing the wealth gap.

Minority-owned businesses disproportionately face barriers to financing, and these barriers can ultimately determine the success or failure of the business. To combat this, we have taken an approach to business lending that accommodates for the challenges that minority business owners are confronted with.We take pride in our ability to work with our customers on a one-to-one basis to determine their needs and obstacles. As a community bank, we understand that considering the individuality of the businesses we serve allows us to create solution-based plans.

We are also positioned to provide lending products for a range of circumstances. From conventional loans for real estate transactions, acquisition or equipment purchasing to SBA lending products that provide greater flexibility, M&F Bank has the ability to work with borrowers to find a solution to fit their specific needs.

The creation of strong local economies gives way to a better chance at reducing the wealth gap. This, as well as the fact that our bankers live and work in the communities we serve, is what bolsters our dedication. We welcome the opportunity to work with you and your business to provide a solution-based plan for your individual needs.

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