Latino entrepreneurs are on the rise: there are more than 3.16 million Hispanic-owned businesses in the U.S., which contributed nearly $500 billion to the U.S. economy last year. Those numbers indicate a business growth of nearly 40 percent since 2007, and a revenue growth of $110 billion during the same period. Nonetheless, when Latino and black entrepreneurs enter banks to secure a loan to jumpstart their small businesses, they are given less information, asked more questions regarding their personal finances, and are offered less help with their application than white loan applicants. A report by business school professors at BYU, Utah State and Rutgers casts light on the bias in the U.S. banking industry.

Researchers sent nine businessmen — three white, three black, and three Hispanic — to banks, where they sought a $60,000 loan to expand their businesses. Each man was given the same clothing, and they had similar education, comparable financial profiles and similar physical builds. Despite the similarities, loan officers at the assorted banks treated the minority businessmen worse than they treated the white businessmen.

"There is a general belief among Americans that we're the land of opportunity and that anyone can pull themselves up by their bootstraps," said study co-author Glenn Christensen, an associate professor of marketing at Brigham Young University. "It is a land of opportunity, but that opportunity is not always equally accessible."

Minority applicants received less information regarding loan terms, weren't handed business cards as often, received heavier inspection of personal finances, and were given less application aid from loan officers. However, this treatment isn't new: last year, the Small Business Administration found that minority entrepreneurs rely disproportionately on personal capital and receive less support from banks. As a result, their businesses function with significantly less overall capital compared to non-minorities. Discrepancies in wealth have been identified as a contributor to the problem; the average net worth of a white household is $113,822 compared to $13,375 for Hispanic families and just $8,650 for African-American families. For this reason, white owners often frame their entrepreneurial journey as being "on level ground," while black and Hispanic owners were more likely to describe it as "uphill."

"If you are white and set out to get financing for an entrepreneurial venture, it might be a tough journey," Christensen said in the report. "But, generally speaking, you would experience fewer obstacles and find more help along the way than if you came from an African-American or Hispanic background."

The study adds to growing evidence that funding for business ventures is more easily afforded to white entrepreneurs. At the same time, minorities have to move against the grain to rise up in business, working with less funds and little-to-no investors. And if businessmen of color happen to be approved for financing, the discrimination does not end. Minority business owners pay interest rates, on average, that are 32 percent higher than what their white counterparts pay, according to data released by the Federal Reserve two years ago.

"Many consumers are driven to start their own business as part of their journey for the American Dream," said lead author Sterling Bone, a former marketing professor at the Marriott School and current professor of business at Utah State University. "They knock doors and they chase after this dream only to find that because they are a minority, their ability to lay hold of that dream for themselves and their families is frustrated."

There has been a continual upsurge of minority business creation and acquisition, in spite of circumstances regarding financing, but maintaining those businesses can be difficult if they ever stumble and are in need of financial assistance from a banking institution.

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