Before all the chaos of COVID-19, black-owned businesses were already in a precarious position. According to a study from the Federal Reserve, 58 percent of black-owned businesses in the United States were in financial distress as of the end of 2019. Distress was measured by a number of markers, including low profits, low credit scores, weak earnings, or accounts in collections. Then came the pandemic.
In February 2020, the National Bureau of Economic Research counted 1.1 million black business owners. By April, that number was down to 640,000 a loss of over 41 percent. Overall, the United States lost 22 percent of all business owners, meaning that black entrepreneurs took an unfair share of this massive economic hit.
More than 95 percent of black-owned businesses were ineligible for COVID-19 business aid funding because they had no employees, a massive loophole in the program meant to preserve small businesses through the pandemic. There has so far been no plan to expand aid to cover this vulnerable part of the business landscape from the federal government, though several private donors have sought to shore up the lack of support from Washington, D.C. Kanye West, for instance, donated $2 million in part to black-owned businesses in Chicago and other cities. Anastasia Beverly Hills, the black-owned cosmetics brand, is donating $1 million to support black-owned businesses around the country that have been impacted by COVID-19.
Black consumers, too, took a hit. Black unemployment as of April was at 16.7 percent, two and a half points higher than white unemployment. In May, black unemployment grew while white unemployment began to shrink. Black-owned businesses, which are largely situated in black neighborhoods, felt the brunt of that loss of spending power and consumer demand.
As the economy begins to bounce back, particular support needs to be given to black-owned businesses before their numbers slide further down. Every business lost is a loss of jobs, of economic advancement, of long-term potential for wealth, and ultimately, a loss of racial equality for the community.
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