For decades, small businesses have been the backbone of America. And while Black workers have helped these businesses succeed, being a Black business owner has not been easy. In the age of online shopping, we forget that in many places in the U.S., Jim Crow laws made it illegal for Blacks to have a storefront or to own a business. It takes courage to leave behind the security of a paycheck for the uncertainty of self-employment, no matter who you are. However, being a Black business owner means dealing with additional challenges.
Saving for startup costs can be challenging if your salary can barely make ends meet. Business loans can also be difficult to acquire. According to a report conducted by the Federal Reserve Bank of Atlanta in December 2019, “38% of Black-owned small businesses did not receive any of the financing they applied for, compared with 33% of Latino-owned businesses, 24% of Asian-owned businesses, and 20% of white-owned businesses.”
Those who persevere may be turned down by 35 to 40 banks before securing a Small Business Association (SBA) loan. That can be exhausting. Obtaining financing to keep the business going or to get you through an emergency can be just as daunting. And Covid-19 did not make it any easier. Sometimes, borrowers of color did better with online lenders than with local banks. Human-to-human racial biases seemed to be the culprit. Unfortunately, humans have also been known to program racial biases into algorithms. Lack of information, mentoring, and community support can be problematic. In addition, marketing and advertising can be expensive, and return on investment can take time.
As a nation, if we are serious about supporting Black businesses, we need to commit to equity in financing. Financial institutions will need to look at their small-business lending practices. Employee biases, which also play a determining role, will have to be examined. The general public will have to be intentional in supporting Black-owned businesses. So make it a point to promote your favorite Black-owned companies on social media. Also, if you’re an experienced or retired business person, offer to mentor a Black business or entrepreneur. You can sign up for their newsletter when you visit their website. Take the time to write a review when you purchase their products and services.
Black-owned businesses tend to hire from within their community, which helps with unemployment. In addition, Black business owners tend to support nonprofit organizations that benefit the community. They often help youth and after-school programs and serve as mentors to youth.
Large businesses can be a game changer by partnering with Black-owned businesses and offering their expertise. Much can be done to ensure the success of Black-owned businesses.