Black-owned Small Business Response to the Pandemic

Published 2:18 pm Sunday, August 22, 2021

By Janita R. Stewart
U.S. Small Business Administration’s Southeast Acting Regional Administrator, serving Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee

Black-owned small businesses represent 9.5% of all small businesses in the United States (around 2.6 million).  Georgia and Florida are among the top 4 states with the most black-owned small businesses, and these are major markets in the Southeast Region.  Much of the American Rescue Plan Act has been delivered through programs administered by the U.S. Small Business Administration (SBA).

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According to the Stanford Institute for Economic Policy Research, the pandemic contributed to tipping 41% of Black-owned US businesses into closure from February to April 2020. Of the businesses that survived the pandemic, 8.8% black-owned businesses reported profitability and growth according to a study.  This data leads to the question: which response strategies did black-owned businesses use to survive the pandemic?  The answer is clear through data collected through a survey. According to the study, 53.4% of Black-owned businesses applied for federal recovery funding, and 20.3% received the full amount that was applied for.

The top industries represented by black-owned business in the U.S. include Accommodation and Food Services, Construction, Health Care and Social Assistance, Professional, Scientific, Technical Services, and Other Services (except Public Administration), and Manufacturing. These industries align with the top funded industries through the Paycheck Protection Program (PPP) reflecting that black-owned businesses gained some traction in utilizing the PPP.

Healthy Black-owned businesses could be a critical component for closing the United States’ Black–white equity gap.  The SBA has strived and continues to strive to lessen this gap through opportunities made available to small businesses, especially in underserved areas. Other than the recovery programs administered through SBA (PPP, EIDL, SVOG, RRF, CNPP, etc.), the SBA has positioned itself in communities to be a key resource to the black business community.

One effort that the SBA has made in terms of servicing the black-owned business community is through the Women’s Business Centers. Five of the 136 centers across the United States are collocated with Historically Black Colleges and Universities (HBCUs) located in the Southeast. Also, 18 Small Business Development Centers are hosted by HBCUs; 8 of them located in the Southeast. Overall, black small business owners are younger and include more women than the general small business population. According to The State of African American Owned Businesses by, 22% of African American small business owners are millennials, nearly twice as many as the 12% of millennial small business owners in the general population.  With this data in mind, SBA is clearly investing in America’s youth.

Black-owned businesses have also responded to the pandemic through use of SBA’s traditional 7(a) and 504 Loans.  So far across the Southeast Region in FY 2021 (ending September 30), there is already an increase of 53 loans over the full fiscal year of FY 2020 valued at an increase of $58 million and this number can only continue to increase as the fiscal year end nears. On the federal government contracting side, Black-owned small businesses should be determined, posture, and anchor themselves to be full participants in the world’s largest marketplace. If eligible and not yet certified, apply for certifications including 8(a), HUBZone, WOSB and EDWOSB, etc. Federal contract awards from this source can add an additional stream of income enhancing your business development and growth.

In honor of Black Business Month, it is important to me to capture the overall health of the black business community and to understand the response strategy of black-owned small businesses. This is a time that is critical for communities to work together, blend resources, and support one another for continued business survival and growth.