Creating a Just Future for Black Businesses
By Brittany Bennett Weston, ResilNC Executive Director
Nearly two years ago, ResilNC launched as an initiative of Partners in Equity to understand the effects of the COVID-19 pandemic on North Carolina’s Black-owned businesses. At the time, our founders had no idea that the pandemic, still in its early days, would last beyond 2020 and have the deep affects it has had on our world, communities, and economy. What they did know was that Black-owned businesses were largely left out of the SBA’s Paycheck Protection Program (PPP) and other stimulus programs, which were created to buoy the economy by helping qualifying businesses avoid laying off employees or closing permanently. They wanted to bring attention to yet another historical moment where Black people disproportionately were denied access to greatly needed resources and share to potential solutions during an unprecedented crisis.
On the eve of ResilNC’s second birthday, we are starting to get a clearer picture of the impact of the pandemic’s shelter-in-place mandates and the inequitable recovery on Black businesses. Forty-one percent of them closed across the country less than a year into shutdowns, pushing many entrepreneurs to the gig economy to make ends meet. As highlighted in our 2020 report, of the more than $12 billion in PPP loans to small and medium-sized companies in North Carolina, only 0.44% went to businesses identifying as African American or Black-owned despite Black people making up 22% of the state’s population. Many of the most vulnerable businesses across the country—the ones that struggled to access the PPP program in the first place— have been denied loan forgiveness. These business owners are now subject to burdensome debt service and uncertainty instead of relief. Alongside the pandemic recovery, we also saw $67 billion in pledges by banks and other corporations to support racial equity following the 2020 uprisings, but so far only about $652 million has actually been deployed—that’s less than 1% of what’s been promised.
The purpose of ResilNC’s work is to help realize a future where Black people who choose to start businesses can thrive and build generational wealth in North Carolina and beyond. The data and stories we’ve gathered show just how critical the right capital and connections are in establishing profitable firms that can weather future economic disruptions and continue to anchor their communities. However, currently only 4% of Black businesses across the country survive the start-up stage, largely due to lack of access to capital. A strong future for Black businesses and our economy requires that funders are willing to invest in the opportunities and innovation created by Black entrepreneurs, rather than only seeing them as risks. We need more non-extractive, equity-like capital to support early-stage firms in getting to sustainability. We also need to root out bias and adopt more equitable practices in loan underwriting such that Black businesses receive appropriate, affordable financing. Our 2021 report provides a list of recommendations for how we build a stronger Black business ecosystem including, the following:
Create and tailor incubator and accelerator models that are culturally competent in meeting the unique needs of Black entrepreneurs.
Strengthen alternative lending options by (1) increasing capacity of existing CDFI’s through increased federal and private investment, and (2) expand and/or create new CDFI’s in underserved markets.
Additional capital in the form of grants for those seeking follow-on financing beyond startup capital and wish not to accrue additional debt.
Encourage impact investment models or private corporations pledging cash holdings and/or net income annually to support financial institutions focusing on black communities and businesses.
Establish pre-seed investment funds exclusively for Black entrepreneurs and, in some cases pivoting existing funds to target early-stage businesses investors wouldn’t typically consider.
As the product of three generations of self-employed people, I personally believe in the promises of business ownership for Black people. It allows for self-determination while creating products, services, jobs, and anchoring spaces for our communities. Even today, Black business owners have 12 times the wealth of non-business owners even with our current inadequate levels of investment. Black businesses are also more likely to employ other Black people when they have employees, which only about 2% of Black-owned firms do. Imagine what would happen if we at least reached parity in investment, or better yet, saw repair for centuries of theft and disinvestment. What if the story of Black businesses (and Black people in general) is not about resilience in the face of struggle in the future, but one in which we have access to everything we need?
There is much work to do to realize an abundant future for Black businesses. Entrepreneur Support Organizations (ESOs), entrepreneurs, and other stakeholders must collaborate to build the Black business ecosystem of the future with a focus on self-determination and sustainability. In many ways this type of collaboration that we propose is just a return to the ways of generations of Black communities – centering trusted relationships and cooperation to ensure everyone’s needs are met. When attention to systemic racism fades and others fail to make good on their promises, Black-led ESOs working together to consistently support Black-owned firms and entrepreneurs will continue to fill gaps and pool resources to meet community needs. ResilNC looks forward to continuing to work with ecosystem partners to collect data and stories of Black-owned businesses and to convening colleagues to advocate for the right kinds of capital and strategic support needed as the world evolves around us.
On this last day of Black History Month 2022, let’s move forward with renewed purpose and commitment to Black people and Black businesses because we are in the future and we are the future.