This column is part of the What’s at Stake series of editorials and opinion commentary that explores issues voters will confront in this year’s presidential election. Find the full series at dallasnews.com/whats-at-stake.
The coronavirus pandemic hit Black communities hard. Not only have Black people died from the virus at disproportionate rates, but so many Black businesses had to close, and many may never reopen. A study from the National Bureau of Economic Research showed Black businesses were harmed the most in the shutdown, with 41% of them closing their doors from February to April.
If the novel coronavirus illuminated the persistent inequities faced by Black communities, the civil unrest following the death of George Floyd forced everyone in this country to come to terms with what we were going to do about it. Messages of support for the Black Lives Matter movement have come from a wide variety of people and companies, including Utah Sen. Mitt Romney, Ben & Jerry’s ice cream, Disney and Amazon.
But speaking out can only get us so far. The barriers to success for Black communities and Black businesses have been too high for too long. Black-owned firms earn lower levels of revenue than similar white firms and Black entrepreneurs are less likely to get loans than their white peers in the same industry, according to a report by the Association for Enterprise Opportunity. These inequities will not disappear because of more tweets from more people. Action must be taken.
This issue is personal to me. I am a Black, female small business owner with a family that relies on me. I have been fortunate and successful, but I have struggled to get a loan and access the capital I need. I was almost shut out of accessing coronavirus relief funds because I did not have a formal relationship with a bank.
These inequities not only hurt me and entrepreneurs like me, but they also hurt our society and our economy. Black businesses, because of lack of access to capital, among other reasons, cannot grow and hire like their white peers. Yet if 15% of Black-owned businesses had employment parity, they would create 600,000 new jobs and add $55 billion to the U.S. economy, according to a study from the Association for Enterprise Opportunity. Economic justice isn’t a Black problem, it’s an American opportunity.
So how do we harness this American opportunity? In running my business, CapEQ, I support financial institutions, governments, nonprofits and other intermediaries to develop programs that leverage the tools of capitalism to do well by doing good. Based on our research and work with dozens of clients around the country, there are three things we can do to support Black businesses and boost our economy:
Focus on growth: Everyone loves start-ups, and they are an important part of our economy. But there are a lot of existing initiatives to help people of color start businesses. What we need is something to help them grow their businesses.
Once Black businesses grow beyond the start-up phase, they can accelerate their work and hire more people. Future policies, like those in additional coronavirus relief packages, should target businesses poised for growth and create capacity-building efforts to address common barriers to growth, like making government procurement opportunities more accessible.
Build an ecosystem: Right now, Black businesses are more or less on their own. There is not the same ecosystem for Black businesses as there is for white businesses. With some notable exceptions, chambers of commerce in communities are typically white-led and focused on the needs of white entrepreneurs.
We need to support organizations and networks that are focused on aligning policies to support Black businesses and removing barriers to accessing capital. The New Orleans Business Alliance, for example, has explicitly focused on Black business owners and Black employees in its economic development work. They recently saw a significant reduction in Black male unemployment while also exceeding their targets for investing in disadvantaged businesses.
Reimagine industries: Black businesses tend to be in low-growth industries that have lower barriers to entry, for example, beauty salons and child care centers. Traditionally these types of businesses are not seen as scalable, similar to the way that jitney drivers in communities of color weren’t considered valuable until white-led corporations like Uber and Lyft came along.
If we reimagine these often-overlooked industries as assets for both the Black business owners and their communities, growth and wealth creation are possible. Mayvenn is an online platform that did just this: It helps people of color keep the dollars they spend on beauty products in their communities by connecting consumers directly to local stylists. It has reinvested millions back into neighborhood salons and, according to a report in Forbes, is valued at $100 million.
To further these and other recommendations, CapEQ is launching an initiative with the W.K. Kellogg Foundation, the Surdna Foundation and the Brookings Institution, called Path to 15-55. We are bringing together key players to help grow Black businesses and reach that $55 billion American opportunity. If you or someone you know can help us get there, visit pathto1555.org and sign up to help us power this journey.
Tynesia Boyea-Robinson is chief executive of CapEQ in Dallas. She wrote this column for The Dallas Morning News.