PROVIDENCE – A recent report looking at state support for minority-owned businesses throughout the U.S. ranked Rhode Island the 16th-worst in the country for minority entrepreneur success.
The report by Lendio, an online loan marketplace focused on small businesses, found that compared to the national average, Rhode Island distributes fewer loans to under-resourced communities, with its community advantage loan approval rate dropping by 11.7% from 2021 to 2022.
And while 31.1% of the state’s overall population identifies as a minority, these individuals own just 10.1% of all businesses in Rhode Island, according to the report. Meanwhile, the number of jobs at minority-owned businesses in the state dropped 1% from 2019 to 2021.
Lendio ranked Rhode Island 36th overall out of the 50 states and Washington, D.C. The designation makes Rhode Island the second-lowest-ranking state in New England, coming just ahead of Vermont in 37th.
Rhode Island’s direct neighbors placed considerably higher in the report: Massachusetts ranked 13th in the U.S., while Connecticut placed 16th.
The Ocean State’s low ranking didn’t come as a surprise to Lisa Ranglin, president and CEO of the Rhode Island Black Business Association.
“Rhode Island does not have a plan as it relates to investing in communities of color,” Ranglin said. “There has been a law on the books for over 37 years, and the state has not made any traction as it relates to investing in Black and other minority businesses.”
That law, passed in 1986, requires the state to fund and direct programs and projects that will support minority and women-owned businesses.
While the state has directed money and resources into studies on supporting minority-owned businesses, such as a 2021 report financed by the Rhode Island Foundation and R.I. Commerce Corp., and established a Division of Equity, Diversity & Inclusion, officials have failed to create a comprehensive plan to foster minority business growth, Ranglin said.
“The state has studied this over and over,” she added. “I think they’re shuffling papers around, but they’re not moving the dial in any way.”
The state also leaves minority business development projects to white-led organizations, Ranglin said, while “organizations doing the work like the Rhode Island Black Business Association are getting crumbs instead of adequate funding for us to drive impact.”
“We know that when Black and brown businesses are thriving, they create real jobs,” Ranglin said, “and people are put to work in communities of color, communities that have been left behind for way too long.”
While Rhode Island ranked lower than most states, glaring inequalities persist throughout the U.S., the report detailed.
Nationally, the number of minority-owned businesses increased substantially from 2017 to 2020, according to Lendio, and has increased by more than 50% since 2007. But these businesses continue to face racial disparities in loan approvals: While white-owned businesses have their business loan requests fully approved 53% of the time, this rate drops to 35% for Asian-owned businesses, 28% for Hispanic-owned businesses and 27% for Black-owned businesses.
The top three overall states for minority entrepreneurs were Hawaii, Maryland and Maine, according to the report, while Montana, North Dakota and West Virginia ranked lowest.
The study drew from U.S. Small Business Administration, Census Bureau and National Minority Supplier Development Council data.
Lendio published the report for the first time earlier this month, and plans to release annual updates.
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.