Our latest edition, coinciding with Black History Month, tried to assess some of the successes and challenges of the changing corporate climate focused on one of the buzziest terms around: diversity, equity and inclusion, or DE&I.The social unrest sparked by the 2020 murder of George Floyd led to a reckoning for many in this country that although slavery and Jim Crow are relics of the past, inequality is a daily condition for nearly a third of Americans. While disparities in policing, prosecution, voting rights, and more are of grave concern, I’ve been thinking a lot recently about the challenges confronting minority business owners and the importance of bridging the gap.Underrepresented minorities, including Black, Hispanic, Native and biracial Americans, have long had unequal access to capital fundraising, credit lines and professional networking that are so important in creating a successful business. These challenges mean that many minority entrepreneurs run their businesses on personal savings, taking small personal incomes to keep their businesses healthy.
[caption id="attachment_203722" align="alignright" width="279"] Jacob Owens Editor Delaware Business Times[/caption]
It’s an approach that may keep the lights on and even employ a handful of people, but it stymies generational wealth building and potential business expansion. It also leaves them very vulnerable in unexpected downturns like the COVID-19 pandemic.Roughly twice as many Black business owners reported borrowing money from family or friends to aid their business than white ones in 2020, according to the 2021 Small Business Credit Survey of small employers by the Federal Reserve. The same margins applied to Black business owners who worked second jobs or extra hours to support their business or worried about the impact of late payments on their personal credit score.Those challenges were worsened by the structural inequity of how federal aid followed to business owners through the Paycheck Protection Program. Reliant on banking relationships that often don’t exist or aren’t strong in minority communities, only 43% of Black-owned firms reported receiving all of the PPP funding they requested versus 79% of white-owned firms. Black-owned firms were also five times as likely to receive no PPP funding after applying (20% compared to 4%).To put it mildly, Black and Brown business owners have not been living through the same global crisis as their white colleagues.Yet, Black entrepreneurs are starting new businesses at an exploding rate in the last few years. Last year, there were more new Black entrepreneurs proportionate to the total population than at any time in the last quarter-century, according to the Kauffman Foundation’s annual study. Those gains came as entrepreneurship comparatively fell year-over-year among white, Hispanic and Asian owners.The news of growing Black entrepreneurship is met by a new survey by Merchant Maverick, a comparison website for small business software and services, of all states on their Black-owned employers, their payroll, and other state employment data to rank the best states to grow a business as a Black entrepreneur. Delaware ranked fifth overall.It ranked well in its share of the workforce employed by Black-run businesses and in Black business owners per capita, though it lagged neighboring leaders like Maryland and Virginia in government resources to promote minority-owned businesses.Other nonprofit programs like the Pete duPont Freedom Foundation’s Equitable Entrepreneurial Ecosystem, Wilmington Alliance’s Kitchen Collective, Delaware Prosperity Partnership’s Startup302 competition, Comcast’s RISE grants, and many more are making a difference in expanding opportunities in the First State too.The impact of that assistance cannot be understated, as an estimated one in five businesses in Delaware are minority-owned despite about 40% of the state being people of color. Closing the generational wealth gap that has created this chasm of opportunity between races will take time and effort.Supporting minority-owned businesses, which are often foundational parts of their communities, is something we can all do to help in that work. That may be as simple as trying a new cuisine for a staff meal or as complicated as reassessing your procurement processes to try to benefit more minority-owned firms. Delaware can also look at investing some of that unexpected budget surplus in a business incubator for minority entrepreneurs, much like the one in Cincinnati that has found enormous success.We have a responsibility to right the wrongs of the past and aiding those looking to better their communities, increase Delaware’s jobs and provide wealth to future generations seems like one of the wisest investments we can make.