Business & Society

Huntsman School Investigates Bank Discrimination in Small Business Lending

Sterling Bone is part of a research team that has received a $1.2 million grant to support "mystery shopper" testing of small business lending practices in banks across the United States.

Utah State University’s Jon M. Huntsman School of Business announced that it is part of a research team that has received a $1.2 million grant to support “mystery shopper” testing of small business lending practices in banks across the United States. The three-year grant was made from the W.K. Kellogg Foundation and will support researchers from USU, Brigham Young University, Rutgers University-Newark and the National Community Reinvestment Coalition to conduct investigations and training to educate both banks and borrowers about discrimination in small business lending.

USU’s Sterling Bone, associate professor of marketing at the Jon M. Huntsman School of Business, was part of a team last year convened by the NCRC’s Center for Civil Rights to conduct a pilot study that tested small business lending practices of banks in two cities. The results of the study showed that bankers were three times more likely to invite follow-up appointments with white borrowers than better-qualified black borrowers. Banks were twice as likely to offer white entrepreneurs help with their small business loan applications compared to black entrepreneurs.

“We cannot accept marketplace discrimination in small business lending,” said Bone. “We have the responsibility, as academics and public policy advocates, to discover and test solutions to eradicate these ills in our society and everyday lives. This grant will allow us to work toward solutions for the welfare of all.”

According to the NCRC, discrimination experienced by minorities seeking home ownership has been studied and addressed in a variety of federal laws designed to prevent it, this new research focused on how discrimination affects minorities seeking business loans, which has not been documented as thoroughly. The $1.2 million, three-year grant received by Bone and his colleagues is aimed at systematically  examining lending practices by banking institutions to racial, ethnic and gender minority customers and to address issues uncovered by the research.

“Entrepreneurship and economic development success hinge on ensuring that small businesses have access to capital,” said Bone. “Unfortunately, if the small business is a black-owned, Hispanic-owned, or is a women-owned business, then access to capital may be more difficult to obtain. We hope to help banks and other lending institutions identify ways to de-bias and rid their employees and practices of the implicit biases that enter into the way they treat and interact with minority customers.”

Bone is a recognized expert in marketplace constraints for minority entrepreneurs and his work has been published in the Journal of Marketing Research, Journal of Consumer Research, Journal of Service Research, Journal of Public Policy & Marketing, Harvard Business Review and other notable journals.

“This grant will provide the means to conduct on a larger scale, the rigorous testing of small business lending practices in the United States,” said Bone. “While we are pleased to receive this important research support, I hope to see the day where our research is history only and not the current state of business and society.”

The mission of the Jon M. Huntsman School of Business at Utah State University is to develop leaders of distinction in commerce and public affairs. The school, with nationally ranked curricular programs and award winning faculty and students, is located in beautiful Logan, Utah, regularly recognized as among the best places to live in the United States.

NCRC and its grassroots member organizations create opportunities for people to build wealth. They work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business.

The W.K. Kellogg Foundation (WKKF), founded in 1930 as an independent, private foundation by breakfast cereal pioneer, Will Keith Kellogg, is among the largest philanthropic foundations in the United States. Guided by the belief that all children should have an equal opportunity to thrive, WKKF works with communities to create conditions for vulnerable children so they can realize their full potential in school, work and life. The Kellogg Foundation is based in Battle Creek, Michigan, and works throughout the United States and internationally, as well as with sovereign tribes. Special emphasis is paid to priority places where there are high concentrations of poverty and where children face significant barriers to success. WKKF priority places in the U.S. are in Michigan, Mississippi, New Mexico and New Orleans; and internationally, are in Mexico and Haiti. For more information, visit

Contact: Eric Warren, 435-881-8439,

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