Entrepreneurship has never been easy for Black business owners. Now a growing body of research shows Black entrepreneurs have been disproportionately hurt by the pandemic-linked economic downturn. For example,
nonprofit Interise reports that while roughly 20% of all small businesses nationwide closed due to the pandemic, that figure doubled for Black-owned businesses.
Breaking it down
Dealing with decades of economic inequality: Only 4.3% of America’s 22.2 million business owners are Black, according to a February 2020 Brookings Institution report, which also finds Black-owned businesses start with about one-third less capital than their white peers and experience difficulties raising money from traditional investment sources. And while 7% of white entrepreneurs obtain a loan in their first year of business, only 1% of Black business owners are able to do so.
Hardest-hit by the pandemic: The pandemic has affected almost every small business in the U.S., but Black- and minority-owned businesses have been among the hardest hit. A 2020 report by the Federal Reserve Bank of New York finds that Black-owned businesses experienced the most acute decline during the pandemic, dropping 41% from February 2020 to April 2020 versus 17.5% among white business owners. Paycheck Protection Program loans reached only 20% of eligible firms in areas with the highest densities of Black-owned firms
Struggling to rebuild: For Black-owned businesses, preexisting inequities have been exacerbated by the economic crisis brought on by the pandemic. These entrepreneurs now face an unequal path and a potentially longer road to recovery.
Below are three key resources Black business owners can consider tapping into:
• Networking
With conferences and workshops now having shifted mostly online, entrepreneurs are making connections in virtual chats such as Zoom coffees and Clubhouse rooms. Come prepared with an intro script, and make a point to book time with people who seem like good connections.
It is also an opportune time to partner up, said author and Porter Brown Associates CEO Kathey Porter. The growing recognition and outcry over police brutality and systemic racism has led Black entrepreneurs to become more receptive to teaming up with others, which can be a great way to build a stronger network.
• Support and advocacy
Coalition to Back Black Businesses
Minority Business Development Agency
National Minority Supplier Development Council
• Lending and grants
Business owners can peruse the grants.gov site to view over 1,000 federal grant programs, conduct an in-depth search, learn about the application requirements as well as process, and ultimately apply.
Under a plan announced in December 2020 by Vice President Kamala Harris and Treasury Secretary Janet Yellen, the U.S. Treasury will allocate $8.78 billion to boost lending to Black-owned businesses and improve access to banking through the new Emergency Capital Investment Program.
