Building trust among Black business owners and entrepreneurs

What’s causing the trust deficit?

According to our findings this year, just 40% of Black businesspeople trust banks to have their best interests in mind. 

The report – the only one of its kind in the UK to look at the full entrepreneurial experience of Black business owners – is based on surveys and interviews with one thousand people in business and those with business ambitions. And it offers a much-needed snapshot of the trends, patterns and challenges our community faces. 

This year, respondents identified persistent discrimination as the biggest obstacle between them and financial institutions. Sadly, 58% of those who were discriminated against also said it had a detrimental effect on their mental health. And some even noted a damaging effect on their physical health as a result too.

It’s perhaps unsurprising, then, that such negative experiences have led many Black entrepreneurs to lack trust in banks and seek financial support elsewhere – usually from friends, family, and the wider community. However, this puts them at a significant disadvantage.

"According to our findings this year, just 40% of Black businesspeople trust banks to have their best interests in mind."

What’s the impact on Black entrepreneurs?

Typically, our community has limited access to generational wealth meaning that when we choose to self-fund rather than going to the bank, we are only raising approx. £2000 to start and operate our businesses. Moreover, even when we choose to secure funding via the bank, our request is modest, with 48% borrowing less than £5,000. This is not a significant amount to start and run a successful business, and ultimately limits the growth ability of the venture, as entrepreneurs are forced to diversify their roles without expertise or resources.  

And we have seen the impact of this, with six-in-ten Black solopreneurs having an annual turnover of less than £20,000 last year – under half of the UK average.  So you see, while family, friends and the wider community undoubtedly have the best intentions, offering money to loved ones to help set up their business ventures, it often does little to boost the success over the long term. This is where financial institutions must make a steadfast commitment to improve trust with the Black community.

Next steps

As our work continued into year two of the research, it became clearer that the type of change we are truly seeking goes beyond just us and Lloyds Banking Group. The need for action on a systemic level is evident and urgent; and will require buy-in and work from the collective business ecosystem. Visible movement in this area is ultimately how financial institutions truly rebuild trust with the Black business community.  

Given this, it’s vital that financial institutions such as Lloyds Banking Group, the UK Government and The Black community work together, alongside organisations like the APPG for Ethnic Minority Businesses to tackle the systemic barriers facing entrepreneurs and close the trust gap. The actions suggested from this year’s research calls for this collaborative approach: 

As you can see, while progress has been made, more needs to be done to establish trust within the Black community. These barriers were built over generations and won’t be changed overnight; but the commitment shown by the Lloyds Banking Group makes me optimistic for the impact we will have in the future. 

It’s important, then, that the Group continues to focus on and encourage collaboration between the Black entrepreneurial community, financial institutions, and all the other groups that can help Black entrepreneurs and business owners realise their potential. Of course, we don’t expect change to happen overnight. But with the right support, I have no doubt that Black businesspeople can reach their potential and then some.