When it comes to accessing credit and capital, New Jersey’s small businesses face unique challenges that are often magnified for small businesses owned by people of color. This toolkit elevates potential solutions that come directly from those in the small business lending ecosystem.

New Jersey’s small businesses face three key barriers, according to a Fed survey:

  1. Perceptions. Over half (51 percent) of NJ small businesses that did not seek pandemic-related assistance said it was because they did not think they would qualify. For NJ small businesses owned by people of color, it was 77 percent.
  2. Products. Twenty-two percent of NJ small businesses that use a large bank listed high interest rates as a challenge. Among those owned by people of color, it was 29 percent.
  3. Processes. Forty-seven percent of NJ small businesses that use a large bank and 34 percent that use a small bank cited a difficult credit application process as an obstacle.

Some ways lenders can address these include building capacity among small business owners, helping them navigate the lending ecosystem, and building trust with lenders of all sizes.

Strategies in the toolkit came directly from community bankers, chambers of commerce, community development financial institutions, and New Jersey small business owners of color. They shared their views during roundtables that the Federal Reserve Bank of Philadelphia hosted in partnership with the New Jersey Economic Development Authority in 2021–2022.

The feedback that business owners shared aligned with regional results from a Fed survey, which found that as pandemic-era programs expired, small businesses in our region still needed funding and were coping with issues around supply chains, staffing, and inflation as of the fall of 2022.

More About the Toolkit

This toolkit is part of a Research in Action Lab, conducted in partnership with the New Jersey Economic Development Authority (NJEDA). The lab focuses on addressing the needs of small business owners in New Jersey and promoting equitable access to financing. This toolkit is produced in partnership with the NJEDA and other community partners.

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