Resilience Through Support of Black-Owned Businesses

Supporting diverse small businesses is vital to economic recovery and maintaining quality of life.  Yet, many of these micro-businesses are in industries most affected by the pandemic shutdowns—services and restaurants—and further, tend to be disproportionately owned by minorities.  

The pandemic has been something of an equalizer, in that ALL small businesses have been dramatically impacted, but certain segments of the business community are better prepared and resourced than others to start planning for recovery.  Structural realities facing Black-owned businesses in particular may make it more difficult for them to recover and thrive.

Barriers to Grants and Capital

The most publicized forgivable loan program, the U.S. Small Business Administration’s Paycheck Protection Program (PPP), was well-intentioned, with the premise that retaining employees would assist the economy.  The program helped many businesses, in spite of instances of fraud subsequently revealed. But beyond the bad actors, the roll out of the PPP highlighted ongoing funding inequity for micro-businesses. One of the biggest barriers to accessing PPP was that funding was delivered primarily through traditional banks, who focused assistance on current customers.  Many micro-businesses do not have pre-existing banking loan relationships. 

Additionally, PPP funds were designed to be used for payroll. Many micro-businesses do not have employees but instead are sole proprietorships, who may be using contractors as de facto employees.  Often, this is simple ignorance rather than flaunting of payroll tax laws, but it does result in actual employee expenses that can’t be documented as such. In other cases, documentation was not available because business accounting systems had not been established.

Furthermore, Black-owned micro-businesses have historically not been at the table, either in board leadership or on staff at organizations with access to networks and capital, specifically banks. Neither business relationships nor personal relationships with these organizations had been established before the pandemic, which lead to a lack of consideration of the needs of these businesses. 

How can we do better moving forward? 

Education

Micro-businesses in survival mode can lack education about assistance, and time to seek it out. For example, a local barbecue restaurant had opened its second location mere weeks before the state shut down dining establishments.  They were unsure how to apply for the PPP loan and convinced that local municipal grant programs, funded by emergency CDBG monies, were not accessible to them either.  With my assistance the business was successfully securing grants totaling $35,000 from the City of Champaign, the City of Urbana and the State of Illinois. 

Lack of Trust

Because traditional banking and finance sources are often not available to Black-owned micro-businesses there is a lack of trust between these groups. Reasons for the financing gap vary, from adverse credit history, a lack of capital, lack of inherited wealth or simply unfamiliarity with banking systems. 

Encouraging a locally-owned bank to specifically target this market can help address this issue.  The staff will need to form personal relationships and understand that additional time might need to be devoted to assistance.  Assigning one or two individuals to be a point of contact can help business owners feel more confident about accessing the bank’s services.  If applicable, increasing diversity in the business banking staff should be encouraged as well.

Increase Assistance

These businesses often need personalized, detailed assistance.  It is not enough to simply point them towards resources and assume they can find their way.  Not being resourced in the first place creates a lack of willingness to ask questions and expose a knowledge deficit, so many business owners just give up.

Allocating additional public resources to support organizations will allow time to analyze a business’s financial situation to suggest specific resources or programs. Additional help might take the form of completing grant or loan applications, writing business plans and step-by-step instructions about accounting systems, as examples.  

In conclusion, EDO’s can help support this business segment by specifically reaching out to Black-owned micro-businesses and providing extra support.  These efforts can result in a long term improvement in equity and a vibrant small business environment.

Rebecca Motley is a business consultant located in Champaign, IL.  Her business, 51-enterprises, llc,,is a State of Illinois woman-owned certified business.  Before starting this business, she worked for municipalities and public-private economic development organizations for 6 years.  Champaign County, Illinois (population 210,000), located 150 miles south of Chicago, is home to the University of Illinois at Urbana-Champaign.