Black entrepreneurs make up an important part of the business community in America. In the past few decades, indicators appear to show that Black ownership is starting to move in the right direction. Black small business ownership increased by 28% in the third quarter of 2021.
Let’s look at how Black businesses have changed in recent years, how the U.S. policies are shaping its future, and the resources that exist for Black business owners.
What Black Businesses have Changed in Contemporary Times
African American business owners were among the hardest hit during the pandemic’s beginning. Census data showed that the number of self-employed individuals dropped by 31% between the first and second quarters of 2020. Since those setbacks, the group is starting to make a resurgence.
In February 2022, the number of self-employed African Americans was just over 1.2 million, as compared to 1.1 million in February 2020. Website domain company, GoDaddy found that Black owners accounted for 26% of websites created for new businesses since the pandemic began. This compares to 15% of all websites by Black owners during the period before the pandemic.
This growth in Black self-employment is due to several factors. Although Black-owned businesses were disproportionately affected by the pandemic, it was the cause of new Black businesses. There was a spike in new online microbusinesses, with Black owners making up 26% of these new businesses.
The National Bureau of Economic Research found that Black neighborhoods with moderate income levels had an uptick in new business registrations. These new business registrations had a statistically significant correlation between the pandemic stimulus checks and the increase in new business registrations among Black neighborhoods.
Another connection is found between the rise of Black entrepreneurship with the loss of employment that inappropriately affected Black workers during the pandemic. Black and Latino workers have the largest employment in sectors like retail, which were the highest job losses at the beginning of the pandemic.
U.S. Policymaking Shaping Black Business
The history of black-owned businesses in the U.S. goes back to the early history of the county. From 1693, free and enslaved African Americas started their businesses in professions like shoemakers and barbers. Despite the Jim Crow laws during the early 1900s, the time between 1900-1930 is seen as the golden age of Black-owned businesses.
During this time, African Americans were forced to form insulated communities separate from whites. This led to a boom in entrepreneurship where across urban areas where Blacks were the majority, small businesses opened at record speeds. The National Negro Business League was founded in 1900 by Booker T. Washington, later changing its name to The National Business League.
Where Policymaking is going Today
In more recent times, government officials have recognized how the economy has never worked fairly for other races in America. Historically, U.S. policymakers have made racially tilted rules that made things like intergenerational wealth transfers more difficult, if not prohibited for Black Americans.
Policies like the Path to 15|55 initiative hope to stimulate growth in Black-owned employer firms. Last year, the Biden-Harris Administration announced reforms in policy to increase equality by setting goals of ensuring 15% of federal contracts go to small disadvantaged businesses (SDB) by 2025.
Resources for Black Business Owners
Raising Capital
Starting and growing a business are huge endeavors. Businesses must secure funding to jumpstart or expand their business ventures. For Black business owners, the funding and capital resources here can help them gain access to cash.
Minority Business Development Agency
The Minority Business Development Agency (MBDA) is run by the U.S. Department of Commerce. Minority-owned businesses can get expert advice and advocacy for growth and expansion into new markets. The agency has 27 Business Centers that business owners can work with to help find capital and strategic partners.
DreamSpring
Business owners in Arizona, Colorado, Nevada, New Mexico, and Texas can get business loans through this non-profit. The organization evaluates prospective applicants more heavily on their character than their paperwork. DreamSpring funds many minority business owners with fair rates. It also provides learning opportunities for professional development.
Disadvantaged Business Enterprise Program
This program is from the U.S. Department of Transportation and is designed to protect small businesses from discrimination when pursuing contracts in federally assisted transit, airport, highway, and related sectors. The Disadvantaged Business Enterprise (DBE) program’s goal is to level the playing field for small businesses that are socially or economically disadvantaged so that they have equal opportunities when competing for transportation contacts.
Community Development Financial Institutions Funds
Funding comes from the U.S. Treasury Department. Financial institutions, including banks, credit unions, venture capital providers, microloan funds, and loan funds, make up CDFIs. Funded by the U.S. Treasury, these institutions can make loans to locals and businesses.
EnrichHer
EnrichHer offers small business loans for women-owned businesses with its fintech platform. Black-owned businesses in the U.S. can apply to its Accelerator + Portfolio Match program.
Black Girl Ventures
Black and brown-identifying founders can find access to community and financial capital through Black Girl Ventures (BGV). It hosts the BGV Pitch Competition where founders have three minutes to pitch its small business idea to an audience. The audience votes with their dollars on winners who take home the capital they raise.
Accion Opportunity Fund
Non-profit lender, Accion Opportunity Fund provides small business loans from $5,000 to $100,000. Interest rates start at 5.99%, with multiple repayment options, transparent terms, and no prepayment penalties. Additionally, program participants can receive business coaching and educational resources.
Backstage Capital
This company invests in women, people of color, and LGBTQIA+-led businesses. Investments range from $25,000 to $100,000. Outside of financial resources, Backstage Capital also provides many other resources including cash flow management, valuation, fundraising, and more.
Small Business Administration 8(a) Business Development
At least 5% of the Small Business Administration’s federal contracting dollars is awarded to small and disadvantaged businesses. After a small business is accepted into the program, it can compete for contracts part of this program. Guidance from SBA Business Opportunity Specialists, business training, executive development, and assistance with management, marketing, and tech issues are other resources available.
Black Founders
Black Founders has created an ecosystem for economic growth for Black business owners. Its “gust” system connects Black-owned startups with investors worldwide. Black Founders hosts networking sessions, conferences, hackathons, and workshops for business owners.
Reign Ventures
This venture capital firm is a Black woman-founded group that mainly invests in See and Series A stage investments. Reign Ventures has committed to building its portfolio with at least 50% representation by women or minority founders.
Business For All
Offered by Hello Alice in partnership with Verizon, Business for All is a grant program that offers 18 total grants with $285,000. 13 of the 18 grants go to businesses led by women, people of color, LGBTQ+entrepreneurs, entrepreneurs with disabilities, and military-connected business owners.
Hustle Fund
This venture capital fund invests in early-stage startups that operate in software, fintech, digital health, and B2B industries. It also invests in pre-seed and seed rounds.
JPMorgan Chase Advancing Black Pathways
Chase Bank’s Advancing Black Pathways initiative provides Black-owned businesses with access to capital, technical support, and opportunities to establish and build their business. Its financing options to help these businesses grow their business include access to capital expenditures, commercial real estate purchases, and working capital and cash.
Black Angel Tech Fund
An offshoot of the Standford Black Alumni Summit, this investment fund connects Black angel investors with Black entrepreneurs in tech. Black Angel Fun invests in early high-growth tech start-ups and also provides mentorship and growth opportunities.
StartEngine
This equity crowdfunding website allows investors and startups to find the right match. Maintaining control of your capital and company is possible using its platform.
Pursuit Lending
This financial organization provides business loans in New Jersey, Pennsylvania, and New York. It has over 15 loan programs that can help business owners that are seeking various goals, including starting a business and developing working capital.
Coalition to Back Black Businesses
This joint venture with American Express, the National Black Chamber of Commerce, the U.S. Chamber of Commerce Foundation, National Business Lead, Walker’s Legacy, and U.S. Black Chambers intends to provide $10 million in grants, training, and resources through 2023 to Black-owned businesses. Businesses must be located in an “economically vulnerable community”, financially hurt by the disruptions caused by COVID-19 and employ 3 to 20 people. Aside from the grants, the Coalition also provides mentorship opportunities, an online hub of resources, and more.
Education and Training
Business owners must handle a variety of different responsibilities to run a business. Entrepreneurship is often a windy road where you must learn how to handle everything from creating a business plan, to hiring staff, and more. The education and training resources below can assist Black-owned business owners with gaining the knowledge and experiences to become successful.
National Black Chamber of Commerce
This nonprofit organization’s goal is to empower Black communities and businesses through entrepreneurship. The National Black Chamber of Commerce has over 100,000 members and provides small business resources to its members. It offers opportunities to network with other black business owners and helps promote Black international trade. The organization also works with government entities on projects related to the subject of diversity.
Code2040
Code2040 focuses on enabling black and Hispanic innovators with access to what they need to enter and become successful in the technology sector. An entrepreneur residency program is offered in several U.S. cities.
NAACP
The NAAP is best known for its work on civil rights. The organization also promotes education through career and college readiness for students. Financial planning and asset building are among the economic resources it provides through its Economic Department. The NAACP partners with several other nonprofits and government agencies to provide financial education and services.
National Urban League
This civil rights and urban advocacy organization serves 300 communities and has 90 affiliates. It provides a variety of services, including helping minority entrepreneurs, The National Urban League has Entrepreneurship Centers located in 12 cities that provide counseling and training to entrepreneurs.
U.S. Black Chambers
The U.S. Black Chambers works with other business-related organizations (such as the Black Chambers of Commerce) to support Black businesses. It offers resources like educational webinars, podcasts, entrepreneur training, and connecting Black entrepreneurs with capital sources.
The Local Initiatives Support Corporation
The Local Initiatives Support Corporation (LISC) works to revitalize communities in need by offering its programs. This nonprofit offers a Small Business Relief grant program to help support Black and minority-owned businesses in the U.S. Additionally, the LISC offers support and mentorship services across states.
Networking
Connecting with investors, lenders, other entrepreneurs, and others is a valuable resource for any business. The resources listed below can help Black business owners by providing a space to build networks and promote their businesses.
Capital Pathways
Capital Pathways is hosted and funded by the MBDA. The organization hosts workshops for minority entrepreneurs in 10 cities across the U.S. Workshop topics include entrepreneurship, business lending, credit counseling, and others. Capital Pathways also helps connect minority entrepreneurs with lenders, investors, and contractors to help with funding and business expansion activities.
Support Black Owned
Support Black Owned is an organization that helps consumers find Black-owned businesses. It developed a directory of Black-owned businesses. These U.S. businesses must have at least 50% Black ownership to be listed. Listings are free, while premium services cost a fee to receive better promotion. Businesses can be searched by the type of business or the state it is located in.
Black Women Enterprises
New York-based, Black Women Enterprises (BWE) is an organization that serves Black women business owners. It hosts networking events, meetings, and workshops designed to help the future careers of Black women. BWE sponsors programs like Business Plan Workshops to help women finish business plans, entrepreneurial workshops, and procurement workshops.
National Black MBA Association
This nonprofit organization’s goal is to nurture Black businesspeople coming into the business world. The National Black MBA Association (NBMBAA) provides mentoring and coaching to members across its 40 local chapters. Each chapter holds its own networking events and other programs. Webinars, business case competitions, conferences, and pitch challenges are some of the leadership and professional development programs offered.
