Three years ago, I partnered with another African-American-owned business to create networking and personal development events for African-American female-owned businesses.
Despite support from our community, and eight events under our belt, our events came to a crashing halt. It took us 365 days to realize what COVID-19 exposed for the entire country. What we also realized: African-American-owned businesses lacking access to funding fail more than they succeed.
According to Fundera.com, 44 percent of African-American-owned businesses use their own cash to start their businesses. Additionally, these businesses receive business financing less often and, if funding is received, capital is given at higher rates when compared to their white counterparts.
Unfortunately, my experience mirrors these dismal statistics. While my business partner and I reached out to several local institutions for financial assistance, we were often met with little to no support. As I began to focus on my own business, I would encounter a lack of access to capital and network the same.
Mahoning County impact of COVID-19 on Black-owned small business
The mandated business shut down of the pandemic caused many businesses to collapse, especially African-American-owned businesses. Fast forward to now, across the nation, COVID-19 restrictions are easing, vaccination rates are trending upward, and people’s lives are starting to return to some sense of normalcy. But within the world of small business, the effects of the pandemic are still being felt among African-American-owned businesses.
According to data from a recent study conducted by Block Advisors, a team within H&R Block, more than half of all African-American-owned small businesses experienced at least a 50% decrease in revenue over the course of the pandemic, compared to a 37% decrease in revenue from their non-minority counterparts.
Local organizations in the Mahoning Valley have taken note and publicly pledged to offer their support to help close the gap, but African-American-owned businesses continue to lag compared to other white and ethnic groups.
Why closing the racial gap matters
According to the Congressional Black Caucus Foundation, data has shown that an increase in African-American-owned businesses adds wealth to the U.S. economy.
The 2012 Survey of Business Owners by the Census reported that existing Black businesses contributed 1 million jobs and injected $165 billion in revenue into the US economy. The path local African-American business owners must navigate to receive access to necessary funding is like a wonderfully crafted scavenger hunt for a prize that seems unlikely to win. Clues are often heavily guarded with historical discrimination, inconsistent information distribution and enormous interest rates that place you back at the beginning.
The wealth gap between local African American small businesses and their counterparts will require a reckoning of personal and policy resolve.
Because as we’ve seen, having the money is only one tier of the solution when there are long-standing exclusionary practices that still lock disadvantaged groups out of the business arena. To ensure equity, the Valley must be willing to recognize the historical impact of inequality that continues to hinder African-American-owned small businesses.— Eartha Hopkins is a Youngstown native and an alumna of The Ohio State University. Born with a penchant for storytelling, the business owner and journalist offers a distinct voice with the goal to inspire her generation to live authentically. Be sure to catch her 2 cents on her website TheLiteraryHouse.com and Instagram @eartha__hopkins.