How to Use Black-Owned Banks to Start Your Business

Welcome to Breaking the Blueprint — a blog series that dives into the unique business challenges and opportunities of underrepresented business owners and entrepreneurs. Learn how they’ve grown or scaled their businesses, explored entrepreneurial ventures within their companies, or created side hustles, and how their stories can inspire and inform your own success.

Black-owned banks have been pillars of the Black community since the late 1800s when they were founded to fight against the economic inequality Black Americans felt in accessing financial services.

Despite being in a new millennium, these banks are still some of the few institutions that offer equitable support for Black business owners. Read on to learn more about the history of Black-owned banks and how you can use them to start your business.

The History of Black-Owned Banks

Freedman’s Savings and Trust Company was the first bank to serve formerly enslaved persons in 1865. Capital Savings Bank opened in 1888 in Washington, D.C., as the first bank organized and operated by Black Americans. A year later, The True Reformers Bank in Richmond, Virginia, became the first chartered Black-owned bank in the country.

Maggie Lena Walker became the nation’s first Black female banker when she founded The St. Luke Penny Savings Bank in Richmond, Virginia, in 1903. A few years later, nine businessmen founded Mechanics and Farmers Bank (now M&F Bank) in Durham, North Carolina, in 1907. They were among the 134 Black-owned banks that served the Black community from 1888 to 1934.

Unfortunately, the number of Black-owned financial institutions has decreased significantly, as Black-owned financial institutions declined over 50% from 2001 to 2018, and there are only 19 Black-owned banks today.

However, many Black entrepreneurs find the support they need with these businesses, and they are valuable tools for developing financial literacy and starting entrepreneurial ventures. Below we’ll discuss how you can use Black-owned banks to start your business.

How to Use Black-Owned Banks to Start Your Business

1. Open accounts

Black-owned banks offer many account options for business owners. You can open business accounts at banks like Alamerica Bank and Carver State Bank that offer in-person branches and online and mobile banking to access your accounts from wherever you are, whenever you need to.

2. Apply for loans.

Banks like OneUnited Bank and Harbor Bank of Maryland make it easier for Black entrepreneurs to access and grow capital with lending programs.

For example, OneUnited Bank offers lending programs in the form of small business or commercial real estate loans.

OneUnited Bank and Harbor Bank of Maryland were among some Black-owned banks that provided PPP loans for business owners during the early days of the pandemic. Harbor Bank of Maryland funded 694 PPP loans that totaled $66 million throughout the pandemic. Most of the loans were issued to Baltimore, Washington, D.C., and Virginia businesses.

3. Build credit.

Many entrepreneurs use credit to establish their businesses, but, unfortunately, financial institutions disproportionately deny Black Americans credit opportunities, or they receive less credit than they request, according to Federal Reserve data.

Given this, Black-owned banks are an essential source of credit for Black entrepreneurs. Many offer a range of credit card options, and some Banks, like Citizen Trust Bank, help customers learn about building and maintaining credit.

4. Receive financial education.

Black-owned banks offer opportunities outside traditional banking services, like education and financial literacy programs for underserved communities.

Industrial Bank, for example, works to strengthen the economy through partnerships and financial education seminars for Black-owned businesses. It reinvests over 60% of its assets into its communities every year, and teams of experienced bankers provide hours of financial education seminars for customers.

M&F Bank also offers a financial literacy course that helps small business owners learn how to partner with financial professionals, grow their businesses, and develop financial skills.

5. Get support.

Uplifting the community has always been a priority for Black Americans. Black-owned banks prioritize supporting their communities by providing training opportunities and jobs for their customers.

Carver Federal Savings Bank is a great example, offering community-focused banking for underserved neighborhoods. It focuses on developing reliable, long-term relationships with its customers, strengthening the overall economic advancement of Black Americans.

Black-owned Banks Lie at the Forefront of Change

Black-owned banks can be the best source of success for Black entrepreneurs, helping people develop financial literacy, build credit, and get the capital they need to pursue their ventures.