In 2004, August was declared the ‘Black Business Month’ on the initiative of activists John William Templeton and Frederick E. Jordan Sr., and for good reason. For while the first Black-owned business in the United States can be traced back to E. E. Ward Moving & Storage in 1881, the unique plight and struggles of Black businesses against the forces of systemic racism and poverty is rarely acknowledged outside the communities. Raising awareness about the extent of discrimination against Black business owners is the crucial first step towards practically creating a more equitable society that we all cherish in principle.
There is perhaps no better indication of how just how daunting the prospects for Black businesses are, than the fact that the COVID-19 pandemic alone wiped out more than 40% of all African American small businesses during its first year! This is incomparably more than any other racial group and can be attributed to the lack of access to capital and financial relief, even in times of national crisis, according to a House Committee report dating back early 2021.
Statistically speaking, Black people are actually one of the most business-oriented among all U.S. demographics. According to latest available data, Black women start or run new businesses at significantly higher rates (17%) than either White men (15%) or White women (10%), even while more on them rely on their own capital than their White counterparts. Despite this, only around two million of the 30 million small businesses in the country are currently in Black hands; a perfect showcase for the incredible obstacles that new Black entrepreneurs have to face to establish their brand.
In fact, according to one estimate, only an abysmal 4% of Black-owned businesses survive their start-up stage, with the rest of 96% succumbing to the systemic pressures that have already kept the Black people down for over four hundred years. Compared to the national average of around 30% failure in two years, nearly eight in ten Black-owned small businesses are forced to shut down within 18 months!
The reasons for this continued struggle of racial minorities is not exactly mysterious. A recent study by the National Community Reinvestment Coalition (NCRC) uncovered staggering discrepancies in the banks’ attitudes towards Black and White customers, even among borrowers with similar financial situations. One major study by the Fed conducted in 2017 found that less than half of all loan requests by Black business owners were ultimately approved. Even more staggering is the fact that only 1% of Black businesses successfully secure a bank loan within their first year.
Despite this, Black businesses continue to have a great impact on the nation’s economic development. For instance, the impact of nearly 1,000 Black-owned businesses in just four counties in Ohio amounts to a rough total of $2.1 billion per year. Over the years, many Black people, including children as young as five years old, have made headlines for their incredible entrepreneurial spirit and skills. This resilience and tenacity in the face of adversity is the only glimpse of hope for a bright future for racial minorities in America.