USA research: almost half of all black-owned businesses closed or will soon shutter

A SURVEY of 600 small business owners from Color Of Change and  the small business organisation Main Street Alliance has revealed disproportionate pandemic impact on black American businesses, a flawed Paycheck Protection Program and the devastating outcomes of continued government inaction

In the US, critical federal coronavirus relief legislation remains stalled in negotiations between lawmakers and the White House.

Barring swift and decisive action by Congress to provide direct grants to black small business owners, the poll indicated black small businesses were on the brink of extinction, with 46 percent either already forced to close or planning to close within the next six months.

The new nationwide poll surveyed 600 small business owners representing a range of demographics on the impact of COVID-19 on their businesses as well as their views of federal coronavirus relief measures. Coupled with the findings of Color Of Change’s previous Paycheck Protection Program poll released in May, and stories from Main Street Alliance members this Fall, the results of the new survey clearly reinforce the dire need for both improved and immediate government relief in order to save black small businesses and the communities they prop up.

“Our new poll emphasises what so many black small business owners already know: unless Congress works quickly to pass new relief legislation and address the racial inequities that exist within current relief measures, a disproportionate number of black small businesses will shutter forever,” Color Of Change president Rashad Robinson said.

“Small businesses are the cornerstone of our communities. The devastating consequences of these closures will ripple throughout black communities and last for generations. Our federal government can no longer wait to bring immediate, accessible relief to black small businesses.”

Black-owned businesses not only generate billions of dollars for the economy annually and create thousands of jobs but also provide critical avenues of upward mobility and independence for black people, generate monetary support for racial justice causes, and create physical spaces where employees and community members can engage in meaningful activism.

In fact, the new survey shows black and Latinx owners are more likely than Asian and white owners to be engaged in a range of community activities. Additionally, black small business owners are most likely to make statements in support of racial justice causes at 46 percent, in comparison to 24 percent of Latinx owners, 21 percent of Asian owners, and 14 percent of white owners.

The decimation of black small businesses therefore threatens not only individual black people and families but entire communities and racial justice movements.

Beyond illustrating the unanimous need for relief, the survey also indicates that any new measures must better address the needs of black small businesses. The results paint a picture of how the Paycheck Protection Program (PPP) and other federal relief measures present too many barriers to access and offer insufficient support to black businesses.

Despite being more likely to apply for PPP support, black small business owners had to wait longer to hear back about their application and were less likely to receive the amount of assistance they requested. Only 33 percent of black PPP applicants received a response within two weeks, whereas 50 percent of Latinx and 44 percent of white recipients heard back in two weeks. Further, only 37 percent of black small business owners received the amount of assistance they requested.

The inequities and hurdles baked into the PPP application process and existing legislation have fueled sentiment among small business owners that COVID relief measures were not designed to help them. Across racial and ethnic subgroups, the poll shows that a majority of small business owners believe COVID-19 relief packages were passed in the interests of major corporations rather than small businesses and working people. Black owners were most likely to believe this, with 77 percent agreeing.

“As Senate Republicans scramble to push through the installation of a new supreme court justice, the stakes of this moment couldn’t be higher for millions of small businesses and working families across our nation suffering financial devastation from the ongoing economic impacts of COVID,” said Amanda Ballantyne, executive director of Main Street Alliance.

“Our polling results are clear on what small business owners believe they need to succeed. With the right investments in long term federal relief designed to rebuild our struggling small business sector, we can not only stem the tide of economic loss, we can rebuild our economy and put ourselves on a path to a more equitable and sustainable economy where small business owners and working people can thrive. But we do not have months to wait.”

The survey shows that while grants are a priority across business groups, black business owners were most likely to see federal grants as a top priority compared to other racial groups, indicating the need for direct grants rather than loans as well as measures like PPP set-asides for businesses with 10 or fewer employees — a category an overwhelming majority of black businesses fall under. 

A summary of key takeaways here.

Methodology:

Lake Research Partners designed and administered this survey that was conducted online nationwide between August 31 and September 16, 2020. The survey reached a total of 600 small business owners with oversamples of 100 black small business owners, and 100 Latinx or Asian American or Pacific Islander small business owners. The sample was drawn from an online panel of small business owners and respondents were screened to be the current owner of a small business in the US, who operates and makes decisions for the business, operates a for profit business, and employs 0-49 employees including themselves and excluding contractors, with a  cap of 25 percent of respondents who employed one person before the pandemic and currently employ one person. To ensure the data reflects attributes of the actual population of small business owners in the US, the base sample was weighted by gender, region, age, race, and number of employees prior to the COVID-19 pandemic. The sample of black small business owners was weighted by gender and age. The sample of Latinx and Asian American Pacific Islander small business owners was weighted by gender, region, race, and number of employees prior to the COVID-19 pandemic. The overall margin of error for the entire sample is +/- 4.0. 

About Color Of Change

Color Of Change is the nation’s largest online racial justice organisation. It helps people respond effectively to injustice in the world around them. As a national online force driven by over 7 million members, Colour of change moves decision-makers in corporations and government to create a more human and less hostile world for black people in America. www.colorofchange.org.

About Main Street Alliance

The Main Street Alliance is a national network of small business coalitions working to build a new voice for small businesses on important public policy issues. Main Street Alliance members are working throughout the country to build policies that work for business owners, their employees, and the communities they serve. www.mainstreetalliance.org.

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