COVID’s Devastating Impact on Black-Owned Small Businesses
In addition to the historic challenges and barriers experienced by Black-owned small businesses, the pandemic has contributed to further burdens, including business closures, a new report shows.
The House Small Business Committee report finds that 41% of Black-owned U.S. businesses went into closure from February to April 2020, the largest closure rate of any racial group.
“Since the beginning of this pandemic, the virus has hit the Black community and Black business owners disproportionately hard,” House Small Business Committee Chairwoman Nydia M. Velázquez said in a press release. “On my committee, we’ve worked to expand access to relief for these businesses by empowering community and mission-based lenders. These steps have led to meaningful progress and helped spread relief to underserved communities. But there is much more we must do. I’m hopeful that this report will provide a sober look at the reality facing Black business owners and help provide a path forward in terms of recovery.”
The report notes that the pandemic has exacerbated long-standing inequalities Black entrepreneurs face, including systemic barriers to success such as lack of access to capital, fewer business mentorship relationships, and a general lack of business opportunity.
In addition, the report finds that Black-owned businesses were less equipped to handle mandated closures, more likely to be located in areas with high volumes of COVID-19 cases and had less access to relief. The report recommends several policy goals, saying that “Congress and the Administration should dedicate the necessary resources to supporting the agencies and programs that assist Black-owned small businesses and work to level the playing field for Black small business owners.”
Recommendations include increased access to capital, “if additional federal COVID-19 relief is approved, Congress should take into consideration the set-asides that will directly impact Black-owned small businesses and entrepreneurs.”
In addition, the Committee recommends increased mentoring support — via increasing funding for minority small business counseling and training outreach — and increased access to opportunities.
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