A pair of recent surveys highlighted how minority- and Black-owned businesses have shown resilience in the face of COVID-19. But the findings also revealed a racial disparity in government aid disbursal as white-owned businesses reported being more likely to receive federal-backed loans during the pandemic.
These surveys, one by Union Bank and the other by small business network SCORE.org, come at a time when the US is facing the problem of systemic racism head-on — all while combating a pandemic that has no end in sight.
It’s also worth noting that the Union Bank and SCORE.org surveys aren’t outliers. A report released in August by the Federal Reserve Bank of New York concluded that Black-owned businesses have been hit especially hard during the pandemic. More recently, a Crunchbase study unearthed how Black- and Latinx-led startups receive an under-represented share of venture capital funding in the US.
Union Bank Survey Shows Minority-Owned Businesses Are Resilient, Adaptive
The first survey, conducted in late August and early September by Union Bank, found that minority small business owners (which the survey defined as including Black, Latinx, and Asian American) were twice as likely as non-diverse businesses to report that the pandemic had a positive effect on their business. The survey also revealed that 34% of minority small business owners envision “a path forward to how their business can survive” while just 20% of non-diverse businesses can say the same.
Minority-run businesses have also shown greater openness to adjusting their business practices compared to non-diverse businesses.
For instance, 50% of minority-owned small businesses reported changing products or services compared to just 38% of non-diverse small businesses. Minority-owned businesses are also more likely to report tweaks to delivery options (47% to 29% of non-diverse small businesses) as well as online advertising (40% to 26% of non-diverse small businesses).
With COVID still ravaging the economy, minority business owners are also keen to see more government aid — 66% of the respondents in Union Bank’s survey said they want to see more support from the government.
SCORE.org Survey Reveals Sobering Facts About COVID’s Effect On Minority-Owned Businesses
The other survey, run in August by SCORE.org, looked more into the impact COVID has had on Black- and Hispanic-owned businesses.
Per SCORE.org’s survey, only 6.7% of Hispanic small business owners and 8.8% of Black small business owners define their company as “profitable and growing” — numbers that pale in comparison to the 14.7% of white business owners who say the same thing.
Additionally, Black small business owners are 90.7% more likely than their white counterparts to have a direct relationship (such as family, staff, or themselves) with individuals infected with COVID. Hispanic owners are 42.4% more likely than white owners to have COVID-related relationships.
Despite the direct impacts on Black and Hispanic small businesses, government aid winds up more often in the hands of white-run small businesses, according to SCORE.org’s data.
For example, roughly 53% of both Black and Hispanic small business owners reported applying for Paycheck Protection Program (PPP) loans. However, only 36.8% of Hispanic-owned businesses received the full amount of money they requested and just 20.3% of Black-owned businesses did so too. By comparison, of the 47.8% of white businesses that sought PPP loans, 63.7% received the full amount.
Numbers for other government assistance programs show similar sobering stories. For Economic Injury Disaster Loans, Black- and Hispanic-run businesses were more than twice as less likely to receive full funding compared to white-owned businesses. For general Small Business Administration loans, 33% of white business owners reported receiving the full amount, compared to a paltry 8.4% of Black business owners and 13.7% of Hispanic business owners.
The Future Of Minority-Owned Businesses
Just like much of the COVID-stricken world, the future of minority-owned businesses looks bleak. However, beacons of hope still exist.
This year’s social upheaval helped spotlight how America’s problem with systemic racism negatively impacts Black-owned businesses. In response to the protests that began this spring, numerous programs have been created to help Black businesses. Back in June, PayPal pledged $530 million for Black businesses and minority communities. In August, Facebook rolled out $40 million in grants for Black businesses, while Citizen Bank allocated minority-owned businesses $1.5 million of grant funding.
America’s social activism also spurred collective support of Black businesses — a survey by Groupon and the National Black Chamber of Commerce found that 75% of Black businesses saw an increase in business between the beginning of June and the end of July. Hopefully, this summer’s surge for Black-owned businesses can help at least more than a few hang on, especially because immediate government aid is looking less and less likely.
For more direct financial aid regarding minority-run businesses, visit Merchant Maverick’s article on the best business loans for minorities. We’ve also written about the top business grants for minorities.
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