Minority-owned small businesses play an important role in the nation’s economic health by driving job creation, raising wages, and elevating better standards of living in communities throughout the United States.

In June 2016, the Milken Institute and the Small Business Administration (SBA) convened a national roundtable at the White House to review the stubborn barriers to capital access that impede Black and Hispanic Americans from starting and growing their businesses.

Following the roundtable, the Milken Institute and the SBA formed the Partnership for Lending in Underserved Markets (PLUM) initiative—a two-year pilot program to develop actionable solutions to address long-standing structural problems that inhibit minority-owned small businesses from accessing capital and growing their operations. Baltimore, MD and Los Angeles, CA were selected as the pilot cities for the initiative.

This paper is a summary of the first phase of the PLUM initiative, which focused on:

• identifying and analyzing the root causes affecting lending to minority-owned small businesses;
• creating working groups in Baltimore and Los Angeles to identify specific challenges related to the loan underwriting process, public policy, and economic development; and 
• initiating research on these topics at the national level.

About PLUM: Partnership for Lending in Underserved Markets

The Milken Institute has partnered with the Small Business Administration on a two-year initiative to develop actionable solutions to address long-standing structural problems that inhibit minority-owned small businesses from accessing capital and growing their operations.

Baltimore, MD and Los Angeles, CA – two cities with high concentrations of minority-owned small businesses – were selected as pilot cities. Their local task forces include representation from the local small business community, local and national lenders, business development leaders, financial technology firms, and local and national policymakers and regulators. Additionally, at the national level, the Milken Institute is developing policy briefs and convening Financial Innovations Labs and other targeted research and activities to identify actionable recommendations to address national policy priorities and the loan underwriting process.

The pilot initiative is occurring over three phases:

• Problem Definition – challenges and opportunities minority-owned small businesses face in each metropolitan area;

• Solutions – identification of potential solutions to address the challenges through established action groups focused on local or national policies and developments and creation of strategic plans to guide execution;

• Implementation – begin execution with local champions and other national recommendations and publish local lessons learned and best practices as well as the outcomes of other national activities.