COVID-19 keeps producing more turbulence for Black entrepreneurs, arguably the worst hit among small business owners by the pandemic.
Black proprietors are feeling the crisis in multiple ways not disclosed before. Those snares include being greater encumbered by remote work requirements, less likely to gain extended lines of credit or outside funding, and facing more difficulty attracting investors. The discoveries are revealed in “The Megaphone of Main Street: The Impact of COVID-19,” a data report done by SCORE, which calls itself the nation’s largest network of small business experts. The report includes an examination of Black-owned businesses, using data from a diverse group of roughly 3,500 U.S. small business owners, including Black entrepreneurs.
Simultaneously, SCORE aims to help businesses. It plans to launch a Black Business Owners Hub in February to provide more specialized resources for Black entrepreneurs. The effort will be similar to the Hispanic Business Owners Hub SCORE rolled out recently. Touching on the new findings, SCORE Vice President of External Relations Betsy Dougert provided this email statement to BLACK ENTERPRISE
“During the pandemic, Black-owned businesses have been more likely to seek–but less likely to receive–both private and government funding, pointing to alarming systemic inequalities that have been baked into the financial system for years. Black small business owners are more than twice as likely as White small business owners to report they do not have a strong relationship with a community bank, and they are more likely to report lower credit scores, both of which put them at a disadvantage when accessing capital. SCORE is here to provide all entrepreneurs with free guidance and support to overcome these roadblocks and thrive, despite the odds.”
Some of the report’s top findings include:
COVID-19 and other health concerns disrupt Black owners far more than White business owners. Black business owners are about 91% more likely to have a direct relationship–family, staff, or themselves–with someone diagnosed with the virus.
- Racial disparities with federal loans are stunning. The SCORE data showed that around 53% of Black-owned businesses applied for PPP loans, and 20% received the full amount. Conversely, nearly 48% of White-owned businesses applied, and about 64% got what they sought. The U.S. Small Business Administration (SBA) helped run the program for PPP loans. The disparity is telling as SBA data show over $525 billion of loans were made since PPP started in April and closed in early August.
- COVID-19 has walloped the bottom line at Black-owned firms, with only about 9% reporting profitability and growth. That figure was nearly 15% for White businesses.
- The pandemic smacked Black businesses harder operationally. Some 45% of those firms found the need to work remotely since mid-March, versus 25% for White-owned firms.
- Black businesses suffered other difficulties. They included being two times less likely than White businesses to get extended lines of credit. Black firms were over twice as likely to have staff infected by COVID-19 than White firms. See more findings here.
On the support front, small business owners can also visit SCORE.org to connect with a free, expert mentor who can help with financing, and help make their marketing strategy effective for the new year. Entrepreneurs can find more free help at the Small Business Resilience Hub. Check out the SCORE on-demand webinar for re-strategizing your business plan to prevail during the pandemic.