Funding ethnic minority enterprise
There can be little doubt that under-funding remains one of the most intractable problems facing ethnic minority small business owners. The difficult task of securing finance for business start-up is the most documented problem facing both existing and potential ethnic minority business owners whether in Europe or North America (Barrett, 1997; Jones et al., 1992; Jones et al., 1994a; Woodward, 1997). Problems of undercapitalisation perpetually thwart the growth and threaten the survival of many EMBs (Barrett, 1997; Basu, 1991). A major debate has been the extent to which the relationships between ethnic entrepreneurs and commercial banks serve to alleviate or exacerbate this problem. Recent research (Curran and Blackburn, 1993; Deakins et al., 1994; Jones et al., 1994a) presents a mixed picture. For some groups, including Greek-Cypriots and Indians, the acquisition of bank finance does not appear to be problematic and, indeed, the positive entrepreneurial image now often attached to such groups may even be an advantage. Even so, complacency is certainly not in order here, since research has thrown up countless instances of Asian funding applicants being turned down by banks in circumstances that raise suspicions of racist discrimination and negative stereotyping (Jones et al., 1989, 1994a; Ram et al., 2003).
In the case of African-Caribbeans the benefit of the doubt is even less in evidence, with negative experiences with mainstream financial institutions consistently reported ever since Ward and Reeves’ (1980) initial report on the question (Barrett, 1999; Brooks, 1983; Jones et al., 1989, 1994a; Ram et al., 2003). Taking the sanguine view, this might be explained in purely technical terms with reference to ‘business problems’ (Curran and Blackburn, 1993), which can be addressed by training and greater professionalism. Less happily, it may reflect the rather more insidious problem of institutionalised discrimination (Brooks, 1983; Jones et al., 1994a. Whatever view is taken, it continues to be a major constraint upon the development of African-Caribbeans in business.
In addressing these problems, some progress has been made by Black-led enterprise support agencies, who appear to have been very active in assisting with business plans, and even the provision of finance (Curran and Blackburn, 1993). But Deakins, Hussain and Ram (1994) suggest a number of further steps that the banks could take. These include the training of staff to appreciate more fully the dynamics of ethnic minority firms; employment of appropriately qualified ethnic minority staff in more influential positions within the organisation; greater involvement in the social and cultural activities of minority groups; ethnic monitoring of customers; and more extensive networking with Black-led support agencies. A recent large-scale study of finance and ethnic minority firms in the UK reiterated these recommendations (Ram et al., 2003).