By Anthony Price, Hartford Business
Capitalism works best when businesses innovate and create jobs.
This was not the case when the COVID-19 pandemic struck in 2020. While all small businesses (companies with fewer than 500 employees) were affected, it flattened Black businesses like a tornado, impacting them far more than other companies.
From a public policy perspective, two questions come to mind: Why were Black businesses impacted more than other businesses? What can be done to strengthen Black businesses?
The answers are essential because Black businesses play a vital role in their communities.
When the U.S. House of Representatives Small Business Committee released the report “The State of Black-Owned Businesses in America” in February 2022, Chairwoman Nydia M. Velázquez stated, “I’m hopeful that this report will provide a sober look at the reality facing Black business owners and help provide a path forward in terms of recovery.”
According to the report, “In 2020, Black business ownership rates dropped 41% between February and April 2020, the largest [decline] of any racial group.”
While “Black Americans owned 124,551 employer businesses, they represented just 2.2% of all employer businesses (the 5.7 million employer businesses with at least one employee),” the report found.
The Brookings Institution, a nonprofit public policy organization based in Washington, D.C., released a report in December 2020 entitled: “To Expand the Economy, Invest in Black Businesses.”
A key finding is that “The underrepresentation of Black businesses is costing the U.S. economy millions of jobs and billions of dollars in unrealized revenues.”
Black people comprise 14.2% of the U.S. population. At a time when America is becoming more “racially and ethnically diverse,” Black-owned employer firms are not keeping up with the pace of the country’s population growth.
Historically, Black businesses have faced challenges and gaps in three areas: Access to capital, mentorship (access to a mentor), and access to business opportunities. Compounding these issues, Black businesses face “institutional discrimination and social inequalities.”
Most Americans build wealth through homeownership. Black homeownership lags behind that of whites. Furthermore, “The median Black household’s wealth ($9,000) is nearly one-fifteenth that of non-Black households ($134,520),” the Brookings Institution report said.
The report states that Black homes are “devalued by an estimated sum of $156 billion — the equivalent of more than 4 million firms, based on the average amount Black people use to start their businesses.”
Capital is necessary. Connecticut is helping.
The state Department of Economic and Community Development (DECD) provides financial support to HEDCO, a nonprofit lender based in Hartford that lends at reasonable interest rates to small businesses throughout the state, including many Black businesses.
Technical assistance is needed to help build up businesses. The Black Business Alliance (BBA) is a statewide organization based in Milford, supported by DECD funding. The BBA provides access to capital, technical assistance, space to showcase retailers, and networking opportunities.
Ann-Marie Knight, the executive director, says, “We’ve become a catalyst for change. We can be an organization that speaks on behalf of Black businesses.”
Led by volunteers, ShopBlackCT.com is a free, online Black-owned business guide. Founder Sarah Thompson and her colleague Yvette Young work at The Village for Families in Hartford. ShopBlackCT.com has over 1,700 businesses listed on its website.
Young says, “We offer Black businesses visibility and marketing support.”
Click here to read the full article on Hartford Business.