Black businesses hit hard by COVID-19 fight to stay alive
DETROIT — Stephanie Byrd agonized over temporarily laying off nearly the entire staff at her family’s Detroit businesses when the coronavirus pandemic hit.
But she’s not just concerned about the impact on their bottom line.
She’s worried other black-owned businesses will struggle to withstand another wave of economic uncertainty, following decades of inequity that made it hard for many to flourish in the first place.
“Most of the people I know who have businesses and are black are terrified right now,” said Byrd, whose family owns Flood’s Bar & Grille, The Block restaurant and the city’s Garden Theater. “There could be a new wave of black businesses that are able to reinvent themselves post-pandemic, but black businesses could also be wiped out for the most part within a black city. What would it look like without black-owned businesses?”
COVID-19 has disproportionately impacted black Americans, infecting and killing them at higher rates nationwide. But experts say the pandemic has also exacerbated existing economic disparities and raised fresh concerns about the survival of black businesses, many of which have been the backbone of cities like Detroit and Atlanta for years.
They also worry the pandemic could widen the existing black wealth gap. According to the Federal Reserve’s 2016 Survey of Consumer Finance, the median white family net worth of $171,000 is about 10 times greater than that of a black family.
Black businesses historically have struggled to gain access to financing due to discriminatory lending practices and a lack of relationships with big banks. But civil rights leaders and historians say their struggles are also rooted in the simmering effects of racism and Jim Crow-era laws that enforced racial segregation and denied black people equal opportunities.
Some black business owners have also expressed frustration with the Small Business Administration’s $659 billion Personal Paycheck Protection Program, which was meant to provide small businesses with loans to keep employees on their payrolls during the crisis. The initial round of funding ran out in 13 days, with complaints over lag times and confusion over the application process.
However, the SBA made improvements in its second round and more than $100 billion remains available.
National Business League President and CEO Ken Harris said his team has been fielding hundreds of questions from members struggling to survive. The league, founded in 1900 by Booker T. Washington, is launching its own $1.8 million digital platform to help business owners gain access to funding.
“It’s going to be a rebuilding process, and we’re going to have to focus on economic recovery,” Harris said.
Several business companies and entrepreneurs, including Facebook, Magic Johnson and Mark Cuban, the billionaire owner of the NBA’s Dallas Mavericks, have announced plans to help businesses owned by people of color, but some worry the assistance might come too late.
OneUnited Bank, the nation’s largest blackowned bank, announced its participation in the Small Business Administration program in April to help minority-owned businesses gain access to the stimulus funding.
“A lot of our customers as well as businesses who are in the community, I’ve counted on one hand the number that actually applied and got funded,” said Teri Williams, president and chief operating officer. “Our community was really getting shut out.”
Last week, the SBA announced it was setting aside $10 billion exclusively for Community Development Financial Institutions, which work to expand economic opportunity in minority and other under-served communities.