Silver lining amid misery
Pandemic saw a boom in Black-owned businesses, largest US surge in decades
RaeShawn and LaShone Middleton, 30-year-old identical twins, were laid off last year from their server jobs only hours apart at two restaurants in Washington.
Out of work and hungry for Maryland blue crabs one afternoon, the sisters, who years earlier had graduated from culinary school, thought, “Why not cook and deliver crabs online?”
The Middletons prepared a bundle of seasoned crabs in their home in Laurel, Maryland, and went door to door in their neighborhood handing out promotional fliers. They sold two orders totaling two dozen crabs that August day.
In May their company, R&L Crab, filled 648 orders for thousands of crabs, plus countless hush puppies, corn and other sides. The sisters want to have their own kitchen and envision five locations covering the Washington region. They also plan to open a bar.
“At this point we just need capital. Capital is what’s important,” LaShone said.
If ever there were a hint of a silver lining in the pandemic, it may be the thousands of Black entrepreneurs turning adversity into opportunity by starting businesses of their own.
Last year there were more new Black-owned businesses proportionate to the total population than at any time in the last quarter-century, according to the Kauffman Foundation’s annual study. Black entrepreneurism ranked higher than for white-owned and Asian-owned companies, the group found.
On average 380 out of every 100,000 Black adults became new entrepreneurs during the 2020 pandemic, up from 240 in each of the prior two years, according to the study, based on census data.
The startup surge was not entirely positive. It was partly a reflection of the heavier toll the COVID-19 crisis took on Black Americans,
in deaths as well as job and income losses.
Many of the Black-owned businesses that formed last year were what are called “necessity” startups — that is, firms that people started to survive a layoff, or a cut in hours or income.
And such necessity enterprises tend to have higher failure rates than “opportunity” startups, which are more common during good
economic times. Still, for many Black workers and would-be entrepreneurs, the economic crisis spurred by COVID-19 provided an opportunity to try for something better.
“They had a moment of pause induced by the pandemic,” said Everett Sands, chief executive of Brea-based Lendistry, whose bank saw a surge in inquiries from Black
customers interested in starting businesses.
Sands’ bank is one of the largest Black-owned small-business lenders in the nation, and it’s been busier than ever, thanks in part to government-sponsored COVID-19 relief grant and loan programs.
Just how many of the new startups will survive is an open question. But Sands and others who work with
Black-owned businesses see reasons to be more hopeful this time than in the past. The overall economic recovery is strong.
“This is the not the first time there’s been a push toward Black business, usually after a nationwide recognition that there is an injustice,” said Mehrsa Baradaran, a UC Irvine law professor who has written about banking and the racial