Owing to inequality and prejudice, black-owned companies have historically faced difficulties. In certain ways, the pandemic exacerbated wealth and access disparities that African-American companies face. By April 2020, our country lost almost 450,000 black-owned companies. This represents a 41% decrease compared to a 17% decrease for white companies.
Access to capital is a stumbling block for black-owned companies. If you don’t have access to financing to develop and maintain a company, no matter how good your product or service is, it will fail. Since most African-Americans do not come from rich families, asking friends or family members for a loan is normally out of the question. Credit problems and overdue approvals can also make obtaining a bank loan difficult for struggling small business owners. Just 1% of black business owners have their loan request accepted in their first year of operation.
Some black business owners got grants for the first time thanks to government relief programs. Many small business owners, however, were unfamiliar with the procedure and failed to acquire the necessary details to apply for a PPP or SBA loan. By pairing black and white “mystery shoppers” to apply for the loan from several banks, NCRC highlighted the racial discrimination that blacks experienced with the PPP loan. The study found that black participants were handled unfairly and given different details than white participants, but the banks did not cross a line that would place them in violation of fair lending laws.
Then, in May, a series of tragic incidents sparked a revival of the Black Lives Matter movement, bringing attention to the inequalities that black people face. People started to think deeply about the problems that black communities and businesses face. More funding and grants were available as a result of the increased visibility of black-owned companies in news outlets and social media.
Nikao’s Founder and Designer, Lisa-Marie Carter, describes her part-year experience as follows:
“The unfortunate events that sparked the BLM movement brought attention and support to black-owned companies like mine, which was on the verge of shutting down. I was tagged in social media posts and included in Beyoncé’s “Black Owned Everything” list. The orders started pouring in almost immediately, and before I knew it, I was running a thriving jewelry company.
Being a black entrepreneur has meant overcoming adversity on many occasions, and while funding for black-owned companies is far from sustainable, I believe it provided many black entrepreneurs with a much-needed boost during a recession that threatened to reverse our hard-won progress. It seems that much of the initial momentum surrounding this help has stalled, causing me to wonder if black lives still matter, and hoping that it will continue to uplift companies whose trajectories might be fully changed with just a little more recognition well beyond 2020.”
As society bravely peels back another layer of unequal social constructs and implicit prejudices, more black-owned companies are increasing their income, expanding, providing employment, and providing critical services to our society. We have been given the opportunity to speak out and endorse social change for a very reasonable request: that all people be treated fairly. This is not going to happen overnight, but we are moving in the right direction. In the future, it is critical to ensure that supporting black companies is not a fad, but rather an integrated and normalized practice.
