Financial Amnesia

Banks routinely dump money on sketchy white-owned business ventures, but if you’re Black, it’s often a different story

A GIF from SNL’s legendary “White Like Me” mockumentary, in which Eddie Murphy disguises himself as a white man for a day.

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Every so often, one of my brothers back in Arkansas texts me a news story about one of the state’s white business owners who received millions in bank financing, only to have the business collapse due to fraud. His latest text was regarding the tale of Little Rock’s Chandler Wilson Carroll.

Carroll operated businesses in at least two states, ostensibly “to serve the regulatory needs of medical device and health insurance companies across the U.S.” Instead, she engaged in an audacious fraud scheme. All told, she fraudulently received a variety of pandemic-related loans from three different banks, totaling more than $2 million:

The scheme began in May 2020, when Carroll received a $1.6 million Paycheck Protection Program loan for her company, Wilcarr Ventures LLC, according to the indictment. Celtic Bank of Salt Lake City provided the money. “I took out the loan, yes sir,” Carroll told [Judge D.P.] Marshall.

He asked her why she did it.

“Well, we needed the money, I suppose,” Carroll said. She said on the application that the money was in part to be used for lost revenue. But that was incorrect, she said. The money was spent on a house, two vehicles and multiple items from jeweler Sissy’s Log Cabin.

The indictment said that she reported on the application that her average monthly payroll as $640,000 with 121 workers. But a former employee told police that the business had just been launched and did not have more than four employees, according to the document.

In addition to the $1.6 million loan, Carroll received a separate $149,900 Economic Injury Disaster Loan through a Texas-based company she controlled. In that instance, she told the bank the business had 11 employees and a 12-month revenue of $90.6 million. According to tax filings, the company had only $499,999 in revenue and no employees.

In the decades since I left the state, my brother has shared dozens of stories of white folks in Little Rock’s business community who are hailed as “movers and shakers” right up until the moment their house of cards comes tumbling down. Unbelievably, while Carroll was bilking banks out of millions, she was featured in the “Women to Watch 2020” section of online magazine Little Rock Soirée.

Just to be clear, I am not suggesting that dishonesty and fraud are limited to white people. I’ve certainly come in contact with my share of non-white fraudsters, like the Black con artist who came my way a few years back.

That said, there’s plenty of evidence showing that, if you happen to be white, banks tend to loosen their purse strings, many times throwing basic procedures out the window. Meanwhile, Black entrepreneurs tend to be scrutinized with a fine-tooth comb. According to a 2020 article by The Guardian, Black-owned businesses are turned down for loans at twice the rate of white business owners:

[M]ore than half of companies that have [B]lack owners were turned down for loans, a rate twice as high as white business owners. The report found that while black-owned firms were the most likely to have applied for bank financing, less than 47% of these applications were fully funded. Even when [B]lack business owners get approved, their rate of failure to receive full financing is the highest among all categories by more than 10%.

When I started my investment business in the mid-nineties, this particular brother (there were four of us) was my first hire. He had a ringside seat to my dealings with Arkansas bankers. He observed how, despite having plenty of cash on hand, collateral, and great credit, most of the time bankers found a way to turn me down.

In one instance, I approached several banks to secure financing for a lucrative purchase order issued to my company by a subsidiary of AT&T Corporation. Without getting too technical, the deal involved an international transaction that ultimately would have resulted in a seven-figure revenue windfall for my company. Because it involved a fair amount of upfront expense, I needed bank financing to pull it off. Every bank I approached behaved as though they’d never heard of purchase order financing.

My contact at one bank asked if, in addition to the implicit guarantee from AT&T, I had a tractor or a bass boat to provide as collateral. “Stick to what you know,” instead of trying to do business with big companies, was another banker’s advice.

One bank routed me to the office of the Small Business Administration. If the SBA guaranteed my loan, perhaps the bank would consider it. That led to a meeting with the SBA’s legal counsel, who suggested I’d fabricated the whole thing. Even after a call with the subsidiary’s president, I was turned down. After months of trying, I abandoned my deal with AT&T.

This sort of banking experience occurred so often that my brother and I used to joke that lending institutions developed “financial amnesia” the instant I walked through their doors.

The following clip of Michael Rubin, the billionaire CEO of Fanatics, underscores the ease with which white folks, white men in particular, have enjoyed easy access to bank financing, regardless of the risk involved.

As you watch him relate this story, which was referenced in a 2012 article in Forbes, keep in mind that Ruben is discussing a multimillion-dollar bank loan he received when he was a teenager.

While Ruben, who was barely out of high school at the time, was able to borrow millions from a bank to flip basketball shoes, I was being rebuffed for a loan guaranteed by one of the country’s biggest corporations, despite having a decade-long career in finance. Would the deals I missed put me on the road to becoming a billionaire? I’ll never know. But I’m not sure that’s what matters.

Before long, I’ll receive another text from my brother. One of us will call the other in exasperation. We’ll reminisce over the bank loans we never got, and the deals that never happened. We’ll probably even laugh it off.

But below the surface, there will still be a little bit of pain.