Survey Finds More than 50 Percent of Black Business Owners Faced Lack of Cash Reserves or Cash Flow Challenges During COVID-19 Pandemic
WASHINGTON, DC — Today, the Joint Center for Political and Economic Studies released a new survey of Black, white, and Latino small-business owners which finds that, prior to COVID-19, Black business owners were overwhelmingly more likely than their white counterparts to have faced operating struggles. Some of the obstacles they faced that are highlighted in “Exploring Challenges for Small-Business Owners Across Race” include:
- Over half (58.1 percent) of Black respondents reported that they faced challenges obtaining needed capital. Less than one-fourth (24.2 percent) of white and just over one-third (35.8 percent) of Latino business owners reported facing such challenges.
- Over half (50.5 percent) of Black business owners reported finding affordable interest rates as a challenge to accessing capital.
- Both Black (28.3 percent) and Latino (25.7 percent) business owners reported challenges accessing affordable property. Black (32.0 percent) and Latino (25.9 percent) business owners reported challenges affording the changing cost of rent.
- Nearly half (47.1 percent) of Black business owners reported no or inadequate access to start-up funding (such as loans, venture capital, or equity). Almost one-third (29.1 percent) of Latino and nearly one-fourth (24.2 percent) of white small-business owners reported no or inadequate access to start-up funding.
- Slightly more than half (50.5 percent) of Black business owners reported no or inadequate access to growth funding (such as loans, venture capital, or equity). While 25.5 percent and 19.8 percent of Latino and white business owners, respectively, reported no or inadequate access to growth funding.
Furthermore, the COVID-19 pandemic has compounded what were already serious issues for struggling Black-owned businesses:
- More than half (57.4 percent) of Black business owners reported a lack of cash reserves or cash flow challenges during the pandemic, compared to 41.5 percent for Latino and 32.1 percent for white business owners.
- More than one-third (37 percent) of Black business owners reported having issues transitioning to online operations, compared to 28.1 percent of Latino and 29.1 percent of white business owners.
- Of Black business owners, 62.7 percent saw a decrease in profits during COVID, compared to 57 percent for Latino and half of white business owners.
“Our report shows what so many have always known to be true: Black businesses have long faced significant barriers to success, and these issues were only worsened by the COVID-19 pandemic,” said Jessica Fulton, vice president of Policy at the Joint Center. “Now, more than ever, lawmakers must introduce and pass the policies needed to ensure that more Black businesses are given a fighting chance at not only surviving but thriving.”
When asked about policies that would most directly support small-business owners during COVID-19, Black business owners reported in significant numbers that enacting a rent/mortgage moratorium, providing direct grant assistance earmarked for small businesses, and expanding free and affordable healthcare benefits, along with broadband, would help a lot.
- Nearly two-thirds (60.7 percent) of Black business owners reported that enacting universal, affordable, or free family care such as childcare, elder care, or long-term care for family members would help a lot, compared to 53.4 percent of Latino and 34.5 percent of white business owners.
- Almost two-thirds (60.7 percent) of Black business owners reported that enacting a rent/mortgage moratorium for small businesses would help a lot, compared to 44.2 of Latino and 29.3 percent of white business owners.
- More than half (57.6 percent) of Black business owners reported that expanding or subsidizing broadband/ high-speed internet services would help a lot, while 49.1 percent and 39.3 percent of Latino and white business owners respectively said it would help a lot.
About the Joint Center for Political and Economic Studies
The Joint Center for Political and Economic Studies, America’s Black think tank, provides compelling and actionable policy solutions to eradicate persistent and evolving barriers to the full freedom of Black people in America. We are the trusted forum for leading experts and scholars to participate in major public policy debates and promote ideas that advance Black communities. We use evidence-based research, analysis, convenings, and strategic communications to support Black communities and a network of allies.