COVID-19 has impacted small businesses throughout our region, and throughout the country.
Nearly all small businesses have felt the effects, but minority entrepreneurs have been especially challenged in the wake of this pandemic.
There’s no denying that the effects of COVID-19 have hit minority and women-owned businesses harder. According to a recent survey from the U.S. Chamber of Commerce, minority-owned businesses are more likely to have tried and failed to secure a loan to ease the strain of the pandemic, and more minority businesses were expecting a drop in revenue. The same poll found that two in three minority-owned businesses feared closing permanently.
Furthering the issue, entrepreneurs of color are struggling to access CARES Act funding provided specifically to help small businesses stay afloat. A U.S. Census Bureau survey reported that nearly half of all small businesses that applied for Paycheck Protection Program (PPP) stimulus funding received payments. However, only 12 percent of Black and Latinx business owners reported receiving any of the funding they applied for, and only 26 percent had received some of the money they applied for.
This sounds bad, but it’s nothing new. The pandemic is hitting minority and women-owned businesses harder because the economic strain caused by COVID-19 is exacerbating existing structural barriers to success, including racial disparities in banking and business practices, disinvestment in minority communities, and lack of access to capital for minority entrepreneurs. Even before the pandemic, entrepreneurs of color were not being properly connected to city resources. We see a growth trajectory of businesses in areas like Center City and University City, but not in areas like North Philadelphia. Why is that?
Fixing this problem is going to take more than providing short-term solutions. Philadelphia is the nation’s poorest big city, with more than 705,000 people living in poverty. The poverty rate is highest among the Latinx community at 37.9 percent, and the Black community, where the poverty rate is 30.8 percent.
To help break this cycle of poverty, we need to provide more opportunities, more access to capital, and more support to minority entrepreneurs. Only 2.5 percent of Philadelphia businesses are Black-owned, despite Black Philadelphians making up 40 percent of the city’s overall population. We know that minority entrepreneurs have a unique problem in that they are wired and constructed the same, but they are disconnected through no fault of their own from three critical components: money, markets and management tools for growth.
Over the last year, United Way, alongside city government officials and PIDC, has engaged in an assessment to better understand the needs of small businesses owned by people of color, women, and immigrants in Philadelphia. Once complete, this assessment will include recommendations on how to increase effectiveness, enhance collaborations, fill gaps, and address opportunities for further investment, with a specific focus on diverse business owners who have been traditionally underrepresented in the business community. It will also result in an Entrepreneurs of Color, Women and Immigrants Fund that will provide much-needed professional services, grants, and loans to minority-owned small businesses.
Philadelphia is currently underutilizing 90 percent of the city that falls outside its central business district. By increasing entrepreneurship and business growth in Philadelphia neighborhoods, the city and surrounding communities will see increased and more equitable business growth in the decade to come. This growth will be enhanced with direct investment from the newly created Entrepreneurs of Color, Women and Immigrants Fund.
In order to overcome poverty, we must fix the systematic racial disparities that have unjustly held our communities of color back. We have a real opportunity to change the narrative as this pandemic has heightened the needs of minority entrepreneurs that are starting their own businesses, oftentimes out of necessity because they were laid off or cannot find work. We have an opportunity to put these minority entrepreneurs in a better position than they were in the past so that they can grow and have the same success that we see in other pockets of the city.
Investment in minority entrepreneurs is critical, not only for increasing diversity in business ownership but for bringing much-needed and accessible jobs to communities suffering from decades of disinvestment. That’s why aggressive and intentional investment in minority-owned entrepreneurship is the way forward.