Black woman standing confidently in an apron
Last spring, Egypt Noble was saving $20,000 to open a restaurant.

Fifty-three years ago, Booker T. Wilkins, a barber in Old Town Alexandria, was turned down twice for a loan at a community bank because he didn’t have collateral. He went back a final time. He told the banker: The loan wouldn’t be for as long as he was in business.  “As long as I am living, I will pay this back.”

He got the loan, for $10,000.

I wrote about Wilkins last year, and in my book, The New Builders.

I thought of his story yesterday when I was on Capitol Hill, listening to LaFarris Risby, the owner of Loving Arms Enterprises, a child-care and education business in Junction City, Kansas.

She went to a statewide bank, National Landmark Bank, seeking a $50,000 loan, Risby said. The bank wanted her to put up her house, her lot and her $700,000 building as collateral. (The bank didn’t respond to a request for comment).

“No thanks,” she said, and walked out.

Some things are the same in these stories – being Black in America still means having the deck stacked against you, for one thing. Being an entrepreneur is still ferociously hard, and involves asking for money. Yesterday’s roundtable discussion with Sen. Amy Klobuchar (D-Minn),  organized by the Center for American Entrepreneurship, made the continuing challenges clear.

But one thing that has changed, a lot: The U.S. banking system. In 1994, there were 14,400 commercial banks in the United States. Today, there are fewer than 5,000. That’s entirely because of mergers. In an executive order aimed at reversing the trend, the Biden Administration noted federal regulators had not turned down a bank merger in 15 years.

In the small business economy, the downside of the merger trend has emerged over time. As banks get bigger, it’s harder for small business owners to develop relationships with bankers who are both knowledgeable and have power to say “yes” to a loan.

No one’s ever done a study that I know of about the relationship between the decline of entrepreneurship in the United States and the decline of community banking. But we do know that access to capital is a huge issue. The Ewing Marion Kauffman Foundation found that 83% of entrepreneurs don’t access bank loans or venture capital (VC funds only about 1% of all startups in the United States, despite the outsized attention it receives from politicians and the media).

The other big change in the finance system is the increased regulatory cost in the wake of the financial crisis of 2007-2008. Small business loans, especially small ones, are not profitable for banks. Large publicly held companies, as most banks are today and as National Landmark Bank is, aren’t being paid to lose money for their shareholders.

But the Market Will Adapt, Right? Not So Far.

New institutions that have sprung up to fill the gap – there just aren’t nearly enough of them. Tech companies, like Fundera or OnDeck, have moved into lending – and were helpful in distributing small business aid during the pandemic. But the financial structure of VC-backed tech is unlikely to support either relationship-building or marginally profitable lending.

There are only a handful of black-owned banks in the United States, but there are more getting off the ground, including Guava, a bank for Black business owners. (Today’s new entrepreneurs are women and people of color – meaning that Black-owned banks are likely to have an outsized impact on the financial system).

Community Development Finance Institutions, which were created during the Clinton Administration, are able to tap into special 0% or low-cost loans from the U.S. Department of Treasury, in turn lending them into their communities, including small businesses. The number of CDFIs is growing, and they’re becoming more organized. The CDFIs in Virginia just formed their own organization to advocate for themselves. But there are only 1,200 CDFIs across the country,

“It is relationship-based business, like community banking,” said Leah Framouw, the CEO of Bridging Virginia, a community loan fund. But “there aren’t enough of us to fill the gap.”

The Human Face of Banking

Wilkins got his loan based on a human connection with a banker, which overcame that era’s brand of racism. Risby was turned down by a larger bank, one that, like all bank, is deeply tied into bigger-is-better system that is more about numbers than relationships.

When I was at Yosemite Park late last spring, I interviewed Egypt Noble, a cook at the Evergreen Lodge. She was working on saving $20,000 to start a restaurant of her own, hoping to do so in a low-cost-of-living locale.

Having grown up in Oakland, the daughter of a mother who used drugs, Noble emerged from the youth program at Evergreen feeling like “I could try anything and do anything.” She left a job as a cashier at Walmart, and over the next six years went on to work as a housekeeper, as a school aide and as a construction worker. Her heart kept coming back to the kitchen. “People ask me, ‘are you cooking today?’” she said. “I made some carnitas that were the bomb. I do try and make my flood flavorful and good.”

It seems sort of obvious that investing in Noble, via a bank loan, would be a good risk, especially if it came along with a relationship with a banker. I think a generation ago, a white entrepreneur would have gotten that loan, and even a Black entrepreneur would have had a chance. Today, neither a white nor a Black entrepreneur has a very good chance at all.

The U.S. banking system is an example of a place where the combination of the today’s shareholder-only capitalism, and a see-no-evil approach to financial regulation has combined to shoot the United States in its once innovative foot. It’s complicated and it’s behind the scenes – but it’s surely what’s happening.

This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit and connect with and

A business journalist for 20 years, am the founder of Times of Entrepreneurship and the co-author of The New Builders.