Throughout the last few years, the Joe Biden administration has been pushing several programs meant to make it easier for business owners — and business owners of color in particular — to get loans.

Many of the programs are geared to making more funding available for community banks and credit unions that serve underprivileged groups as well as providing technical assistance for business owners who want to take advantage of these programs.

That said, the overall lending environment has tightened up over the last couple of years. That’s made it especially hard for people of color to get the funding they need for their businesses.

As an accountant who works with small businesses, Nicole Davis, the owner of Atlanta-based Butler-Davis Tax & Accounting, said her Black business clients typically have a harder time qualifying for loans, often because of limited wealth.

“People of color, we just didn’t have the assets or resources that were passed from generation to generation to kind of lift up our businesses,” she said.

People with less wealth are having an even harder time affording loans now because of high interest rates. That can be a challenge for lenders like Carver Financial Corp. in Alabama and Georgia, which focuses on lending to underprivileged groups.

“We’re taking additional risk because we’re making loans into lower-wealth communities,” said Robert James II, Carver’s CEO.

James has been tapping federal programs, including the Emergency Capital Investment Program and the State Small Business Credit Initiative, which were designed to reduce risk for lenders like him by providing a bigger pool of money to lend out.

“So that we can confidently extend it in a situation where it might be a little shakier with the borrower, in terms of their ability to repay,” James said.

The thing is, interest rates are still elevated.

While these programs can help business owners get loans, they can’t necessarily make them more affordable, said Brett Theodos, director of the Community Economic Development Hub at the Urban Institute. 

“Almost all of them are working in a way that helps mitigate risk, not in a way that fundamentally drives down interest rate costs and debt burdens,” he said.