Black Businesses Matter

Black people have long understood that entrepreneurship was the ultimate pathway to economic freedom. It was our escape from the discriminatory workplaces where we were overlooked for promotions, demoted or let go when profits got tight, and ignored and undervalued when earnings were up. It also gave us access to goods and services that were not made available to us from White businesses and organizations. 

We clung for dear life to the hope that while America was plagued by racism, somehow capitalism would be colorblind. We fearlessly pursued the idea that if we offered an outstanding product and/or provided superior service, we could achieve the American dream. 

Despite the economic barriers and a myriad of challenges, we persisted. By the thousands, Black entrepreneurs struck out on their own with little more than a wing and a prayer. In North Carolina, from 1997 to 2018 the number of minority-owned businesses nearly tripled from 61,551 to 183,333. Similarly, across the nation the 2015 Census data showed that Black-owned businesses increased 34.5 percent from 1.9 million in 2007 to 2.6 million in 2012.

But since that time, the number of Black-owned businesses appeared to have contracted. More recent data from a monthly survey conducted by the Census Bureau and Bureau of Labor reported that there were just over 1 million Black-owned businesses at the start of 2020. And the effects of COVID-19 seem to have deepened that downward trend, with Black businesses decreasing 41 percent since the pandemic started. 

Past Inequities Meet Covid-19

It was no secret that prior to COVID-19 Black entrepreneurs faced inequitable financial challenges. However, this pandemic-led economic crisis has revealed how deeply the roots of racism have coiled around the neck of Capitalism. Plainly exposed are the extreme racial injustices, discriminatory cultural norms and unconscious biases that underpin our financial system. 

There is, however, a silver lining. The re-energized Black Lives Matter movement has created a new awakening among White people around the world, creating an environment where White and Black people have been able to discuss racism more comfortably. In the past three months, I have been encouraged every day by these candid conversations with business leaders, community leaders, co-workers, neighbors, friends and family. I am inspired by how more small businesses, community organizations, along with large corporations and philanthropists are boldly speaking out and declaring their support of a more equitable America.

This is a good sign. If this voiced commitment is coupled with action, it could change this long-standing prejudiced system.  

For decades, the industry has widely accepted hollow justifications that concealed rampant discriminatory practices. The status quo has touted rationalizations such as Black businesses have poor credit history, lack equity, are inexperienced, or have no performance record, while failing to acknowledge the substantial disadvantages that Black entrepreneurs face due to generations of relentless economic disenfranchisement. 

The PPP Falls Short

The Paycheck Protection Program was set up as a “forgivable loan” or “grant” for small businesses. The Program did not require an assessment of an applicant’s credit and assets, which would have resulted in more loans for Black-owned companies. Even so, Black businesses were still nearly completely shut out of the hundreds of millions set aside for the PPP. Based on the Small Business Administration's data, for loans of $150,000 or less, only 1.9% of the funds went to Black-owned businesses while 83% went to White-owned businesses. (Read more.)

This widespread racial bias has left Black entrepreneurs floundering in an economic tsunami.  

Here is a snapshot of the troubling landscape that Black business owners are currently grappling with:

●       There were more than 1 million Black-owned businesses in the U.S. at the beginning of February, according to research from Stanford University, which drew from Census and Bureau of Labor survey estimates. By mid-April, 440,000 Black business owners had shuttered their companies for good — a 41% plunge. By comparison, 17% of white-owned businesses closed during the same period, the Stanford research shows. (Read more.)

●       A “mystery shopping” study by the National Community Reinvestment Coalition, a nonprofit in Washington, found that Black businesses with similar or slightly better financial profiles compared to White businesses, were offered different products and treated significantly worse than their White counterparts in 43% of the test encounters at branches of 17 banks. (Read more.)

●       The average business equity for Blacks is $30,000, compared to $90,000 for Whites. (Read more.)    

The Myths that Hold Black Businesses Back

In addition to the racial injustices, there are a number of prevailing misperceptions that are also contributing to the false narrative about Black businesses and thereby creating economic stonewalls. These misperceptions are discouraging those lenders who otherwise might be inclined to fund minority businesses or partner with them.

Here are some examples of how inequities are fueled by misconceptions:

●       Black businesses are bad investments. This has proven not to be the case. Given the same funding opportunities as White businesses, businesses owned by people of color perform on par.  (Read more.)

●       Black businesses already have the funding they need. A new report released by Morgan Stanley found that 80% of investor and bank loan officer respondents do not think there is a funding imbalance for women and minority-owned businesses (WMBEs) in the United States. They believe that WMBEs get the amount of capital that they deserve to run and grow their businesses. (Read more.)

●       Education is the great equalizer. Getting a college education has turned out to not be the economic equalizer we had hoped. Black individuals with college degrees still report a net worth significantly less than White individuals with the same level of college experience. (Read More.)

●       There is no generational wealth gap. Many people argue that it is hard for both White and Black people to achieve financial success and Black people should just work hard like everyone else. But those who argue that point lack understanding of numerous factors that have contributed to generations of economic discrimination which makes it impossible to level the playing field without restoring the wealth that was wrongfully withheld from Black people for more than 400 years.  (Read more.) 

We Can Change the Future Together

While I am seeing strong pushback from some in power who resist change, I am continually reminded that there are more people who want justice, than not. In fact, the North Carolina Sustainable Business Council (NCSBC) was created four years ago to give business leaders a voice to fight for policies that would advance more equitable treatment for small and mid-size businesses. The organization has been deeply committed to Diversity & Inclusion from its start, which is evident by the issues we have advocated for the past four years as well as the hiring of a Black female Executive Director, and having a diverse Board of Directors. 

We must embark on this journey to economic justice because Black Businesses Matter. They matter because they are essential to the stability of our economy by creating jobs and wealth in our most vulnerable communities, and providing unique goods and services for all customers.

Going forward, NCSBC plans to work with business leaders and community organizations across the state to advocate for new state policies aimed at removing systemic economic barriers and supporting small businesses, with an emphasis on women and minority-owned businesses. 

Last month we hosted an online event to discuss these recommendations titled “How to Sustain Small Businesses During an Economic Crisis.” More than 90 business leaders registered for the event. From that group we will form a coalition of leaders to help push these policies forward over the next couple of years.  You can learn more about the State and Local Recommendations we are considering for North Carolina here.

We are creating an opportunity for you to have your voice heard and to make a difference, join NCSBC today. 

We also want to take a moment to say thank you to the more than 1,200 business leaders who read our e-messages every month. We greatly appreciate you and encourage you to become more active as we work together to create more equitable opportunities for North Carolina businesses. To see a list of the civic campaigns you can get involved with visit ncbusinesscouncil.org.

If you found this newsletter informative, inspirational, compelling, or valuable, I invite you to share it with your network.

All the best to you and yours. Stay safe.

 Vicki Lee Parker-High

Executive Director

North Carolina Sustainable Business Council

Graphics and Editing by Jennifer Tse