The Silicon Valley Bank Collapse Disproportionately Impacts Underbanked Founders

It’s well known that the shutdown of Silicon Valley Bank was the largest US bank failure since the 2008 financial crisis. What is less talked about is the disproportional impact this has on women founders and founders of color, who have historically been underbanked. Even with the FDIC ensuring that depositors have access to their capital, the aftermath of this will have an inequitable impact.

A study from Gusto found that in 2021, 49% of new business owners were women (up 75% from 2019), 10% were Hispanic (up 25% from 2019) and 9% were Black (up 300% from 2019). Despite that significant diversification in founder identities, the study showed that while 70% of white business owners were approved for the small business loans they applied for, only 30% of Hispanic owners and 55% of Black owners were approved. Many studies have shown similar trends around women-owned companies being underbanked. A Zippia report revealed that women founded companies received 2.5 times less money in small business loans than their male counterparts.