Marginalized groups are less likely than their white male counterparts to get loans. It’s not okay.

In 1974, United States President Gerald Ford signed the Equal Credit Opportunity Act into law. As Title VII of the Consumer Credit Protection Act, the ECOA “prohibits discrimination on the  basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.” On paper, this was supposed to put an end to the historically discriminatory lending practices that put women and people of color at a disadvantage. But almost 50 years later, the same issues persist: Marginalized groups are more likely to be turned down for loans and receive higher interest rates when they do get approved. In the business sphere, women entrepreneurs are less likely than their male counterparts to receive the full amount they’re seeking, while black-owned firms are twice as likely to be rejected for loans.

Given the demographics of the self-care industry, these lending practices hit salon, spa, and barbershop owners especially hard — and that’s unacceptable. It’s time to confront this issue head-on and create solutions that make access to capital more equitable.

The modern realities of lending discrimination

You might be wondering, “If the ECOA was passed decades ago, how are lenders still getting away with discrimination?” The answer to that question is increasingly complex. While lenders won’t outright list race or gender as a reason for loan denial, “creditors may ask you to volunteer certain information that might seem discriminatory — for example, race, ethnicity, age, sex, and marital status (married, unmarried, or separated) — because it helps the government keep statistics that fight discrimination” as per the Federal Trade Commission. If lenders have access to this demographic data, it’s possible that their inherent biases could affect the loan process, whether consciously or unconsciously.

According to data compiled by Bell Law LLC, a Missouri-based law firm that specializes in consumer rights, these are the most common violations of the ECOA:

• Charging higher fees to minorities

• Excluding minorities from credit opportunities

• Discrimination on the basis of gender identity

• Asking for information about an applicant’s spouse

• Refusing to loan to those on social assistance

Meanwhile, a 2018 report from entrepreneur mentorship firm score found that “women are slightly more likely than men to start businesses” but “men were more likely to obtain loans or equity financing than women.”

So even though the ECOA prohibits discriminatory lending practices, the data clearly shows that they persist. Startlingly, modern technology is further compounding the issue through machine learning models and algorithms, partially because they’re trained on biased datasets. In other words, the AI tools lenders use to streamline the loan process are perpetuating the same biases that have existed since the dawn of credit.

The path forward for self-care entrepreneurs

At Boulevard, empowering self-care business owners — particularly those from traditionally marginalized communities — has been built into our DNA from day one. We know that lending bias is nothing new, but the industry’s recent struggles, from shifting economic conditions to the COVID-19 pandemic, have forced many entrepreneurs to seek new capital in order to hire staff, buy new equipment, or just keep their salon and spa doors open.

The color of your skin has no bearing on your ability to repay a loan. Neither does your gender identity, country of origin, marital status, use of social assistance, or myriad other demographic factors. But in a world where many major financial institutions still struggle to uphold the basic tenets of the ECOA, how can self-care business owners in need of financing find a way forward?

At Boulevard, we’re actively working towards a more equitable lending landscape. That’s why we created Boulevard Capital, an integrated financial offering for self-care businesses. Boulevard Capital pre-approves Boulevard customers for loans based on their sales history with our platform — not their credit score, background, or anything else. Repayments are automated based on a fixed percentage of your sales, and there are no predatory late fees or compounding interest charges — just a one-time fixed capital fee that’s added to your loan total.

Think about what you could do if you could access extra capital without jumping through unnecessary hoops and facing unjustified rejections. You might upgrade your equipment to give your business a more luxe vibe. Perhaps you’ll bring on a few new stylists or specialists to handle an increased client load. Maybe you just need reassurance that you’ll be able to meet payroll and operating expenses during lean times. That’s your business; our business is making that vision a reality.

Our core values were built on the belief that we all thrive if we work together. Our support for the self-care industry goes far beyond our technology offerings; we share the passion of our customers and want to do everything we can to empower them. This doesn’t undo the decades of discrimination that marginalized entrepreneurs have encountered, and we still have a long way to go. But it’s long past time to change this narrative, and we’re ready to take the next step.