By: Rachel Tunney & Samantha Prince
It is time. It’s been time. As Americans, we need to support black entrepreneurs who are already in business, as well as do more to promote and assist black-owned start-ups. We need this to happen.
The numbers confirm the urgency. Lauren Leatherby of the New York Times reports that black business owners are hurting disproportionately as a result of Covid-19’s impact on all businesses. Professor Robert W. Fairlie’s recent population survey indicates that a higher share of black-owned businesses (41%) was forced to close their doors during mandatory lockdowns as compared to white-owned businesses (17%). Why? Lack of funding through loans or the Payroll Protection Plan is part of the blame right now, but the black entrepreneur’s ability to get financing to support their endeavors has always been a prevalent problem.
Black-Owned businesses are more likely to suffer financial challenges
In the 2019 Small Business Credit Survey – Report on Nonemployer Firms, (Federal Reserve Bank of New York), 76% of black-owned businesses surveyed reported having financial challenges. (See chart.) Financial challenges include paying operating expenses, credit availability, making payments on debt, and purchasing inventory or supplies to fulfill contracts.
Additionally, only 17% of these black-owned businesses reported that their funding needs have been met. Let that sink in! Before Covid, only 17% of the black-owned businesses in this survey reported that their financing needs were met.
From a return-on-investment standpoint, a capitalistic standpoint, and a purely ethical standpoint, this truth is unacceptable. This has to change. Our government, organizations, banks, companies, and individuals who loan, invest, and otherwise finance businesses need to wake up and make every effort to ensure black-owned businesses meet basic financing needs.
We are fortunate that here in Pennsylvania, the Pennsylvania Department of Community and Economic Development has specific programs and funding to ensure that financial assistance reaches minority-owned and woman-owned businesses. So note: if you are a black entrepreneur in another state, check and you may have similar assistance waiting for you!
Black-Owned businesses struggle for other opportunities
Funding is not the only area where black-owned businesses are getting cheated. A recent Pennsylvania report shows obvious disparities between small diverse businesses and non-diverse when it comes to purchasing, and the service providers hired, by the Commonwealth. (We encourage you to peruse this 700+ page report as the numbers are embarrassing.) As a result of this study, Governor Tom Wolf established the Pennsylvania Bureau of Diversity, Inclusion, and Small Business Opportunity to show the government’s commitment to implementing policies and programs that will help improve the quality and quantity of opportunities for small diverse businesses.
For Pennsylvania black entrepreneurs, this agency’s website has helpful information on how to get your business in an advantageous position to sell products or your services to the Commonwealth.
Enough. here’s how you can help
We all need to support black-owned businesses. In a recent CNN Business article, Steven Jumper, co-founder of Ghost Note, and Ben Cohen, co-founder of Ben & Jerry’s, articulated a great way for current business owners to support the cause: “Here is our call to action for American businesses ready to join the fight against systemic racism. SUPPORT BLACK ENTREPRENEURS.”
Support doesn’t just mean money. Support comes from your hiring practices, having black representation in all aspects of the business, junior and senior levels alike. This blog has an article about just that located here.
Support comes from your contracting practices. Who are your vendors? Demand that this world provide more funding for black-owned businesses. For those who can afford it, perhaps provide that funding yourself. Use your business’s position for justice. And empathize – remember when you were down? Low on cash? Did someone help you back in the day? It is time for you to extend your hand to your black business neighbor. Mentorship is a powerful tool.
Who is out there to help black entrepreneurs? Start here. I’m providing some suggested sites of places for black entrepreneurs to seek advice, help, and wisdom. This list is by no means exhaustive:
Black Founders – “Our mission is to increase the number of black entrepreneurs in technology.”
Black Girl Ventures – “A Culturally converging ecosystem igniting economic security, civic engagement, and hyperlocal infrastructure at the intersection of STEM education and entrepreneurship for Black and Brown women-identifying founders, funders, and veterans.”
Byblack – “Building the best directory to find & support Black entrepreneurs.”
Code2040.org – “Nonprofit activating, connecting, and mobilizing the largest racial equity community in tech to dismantle the structural barriers that prevent the full participation and leadership of Black and Latinx technologists in the innovation economy.”
Techstars Foundation – “Actively cultivate startup culture at the local level, growing communities of entrepreneurs through life events, mentorship, and education to create a more sustainable and inclusive world.”
There are numerous other organizations that can and would like to help! Seek them out for funding, training, or marketing.
For all other business owners- let’s do better. We must do better.
Rachel Tunney, at the time of this post, is a rising 3L at Penn State Dickinson Law. Formerly a professional New York City dancer/singer, Rachel now is interested in corporate litigation and has accepted a clerkship in the Delaware Superior Court for after graduation. Rachel currently serves as the Dickinson Law Student Representative for the Pennsylvania Bar Association and is a Comments Editor of the Dickinson Law Review. She is also Professor Prince’s Research Assistant, a position she enjoys immensely.
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Thank you, Professor Prince and Ms. Tunney, for an important and impressive resource.