By Megan Sayles,
AFRO Business Writer,

Reshonda Young is a Waterloo, Iowa native and entrepreneur on a mission to open the state’s first Black-owned bank. The Bank of Jabez, which is set to open this year, will be a community development financial institution (CDFI) and will work to prepare and empower people to create generational wealth. 

The pressing need for a Black-owned bank in Iowa became clear to Young in 2018 when 24/7 Wall St. released a special report identifying Waterloo as the worst place for Black Americans to live in terms of economic stability. 

The financial analysis and commentary company used census data to examine racial disparities in socioeconomic indicators, like poverty, homeownership, unemployment and income. 

In Waterloo, the report found that Black residents earn less than 50 percent of what White residents earn and the Black unemployment rate was more than five times that of the White unemployment rate. It also illustrated the homeownership gap between White and Black communities. 

“In Waterloo, when we look at the wealth gap, one of the biggest things that contributes to that is homeownership,” said Young. “When we look at the rate of Black homeownership in Waterloo, we’re looking at below 30 percent. When we look at the rate of White homeownership, we’re looking at below 70 percent. That’s a huge difference.” 

She also said there is a stark difference in the ability for Black residents to be approved for personal and business loans compared to their White counterparts. 

For Young, Black-owned banks play a crucial role in reducing the racial wealth gap because they tend to provide more accessible education around homeownership and financial literacy, and they lend to Black communities at higher rates than White-owned financial institutions. 

“We know that when Blacks go to banks for home loans we’re denied at least two to the three times the rate that Whites are denied, and that’s the same for small business loans,” said Young. “When you go into a Black-owned bank, you know that they’re not discriminating against you because you’re Black. Black-owned banks can increase homeownership and provide the funding that small business owners need in order to grow their businesses.” 

In addition to her work to open the Bank of Jabez, Young also runs the Cedar Valley Black Business & Entrepreneurship Accelerator, created by 24/7 Black Leadership Advancement Consortium in Waterloo. 

The accelerator launched in 2020 and was designed to proactively serve the needs of the local Black business community, and thus far, it has trained more than 50 entrepreneurs. It was also honored by the United States Association of Small Business and Entrepreneurship for being a model community accelerator. 

“One of the biggest lessons that we’ve learned is that you may have this curriculum that you have set and are working through, but you really have to listen to the people who are going through the program because what you’re teaching may not be as relevant to them as you thought it would be,” said Young. 

“We’ve pivoted the program for each cohort. Each one has been different as we look at the needs of the business owners and as we hear what they want and need to learn more about.” 

Young also said White-owned banks have their own part to play in reducing the racial wealth gap. 

The financial institutions must examine the accessibility of their branches and services for Black communities and inspect their workforce representation, according to Young. Their staff and hiring decisions should be a reflection of the communities they serve. 

It’s also important for White-owned banks to invest in programs created for Black communities, whether they’re small business accelerators, pitch competitions or grants for general operating support. 

“The struggles that Black Americans in Waterloo have felt for so long are the struggles that Black Americans have felt across the country,” said Young. “Black banks make a huge difference in the communities that they serve.” 

Megan Sayles is a Report for America Corps member.