Why Support Black Owned Businesses

20 Aug Why Support Black Owned Businesses

The year 2020 continues to be chaotic and turbulent. While we are trying to dodge the COVID-19 pandemic, we are also faced with a daunting economic and social instability. The locally-owned businesses who were already wearing down because of e-commerce and retail giants, now face a new set of challenges to survive. There is, however, a sector that disproportionately bears the burden of both economic and social challenges – the black-owned businesses.

According to a recent study published by the Stanford Institute For Economic Policy & Research, an estimated 41% of black-owned businesses across the US shut down between February and April 2020 – the highest compared to all other businesses. The study stated that black-owned businesses have limited cash reserves and limited access to capital including bank loans, hence they squarely rely on walk-ins. But now the customers are staying at home due to the COVID-19 pandemic. This drastic decline in the number of black-owned businesses is increasing the social and economic disparities that our society has been fighting for decades. It’s time to step forward and do what we can to support the black-owned businesses during the COVID-19 pandemic.

Here are major reasons why we should support black-owned businesses.

1. The Widening Racial Wealth Gap:

As much as we would like to believe that racial wealth gap is an old story and nonexistent in the 20th century, the reality is starkly different. The median wealth for white families is about 12 times than for black families with one in four having negative net worth. With black-owned businesses shutting down rampantly because of the COVID-19 pandemic, the racial wealth gap is going to worsen.

2. Limited Access To Capital:

It has already been predicted that a majority of black-owned businesses that have shut down won’t be able to reopen. They not only have to recover from the losses but also need capital to reinvest in their businesses. Owners of black businesses hardly have a pleasant experience when applying for bank loans. According to data recently made available from the US Federal Reserve, more than half of companies that have black owners were turned down for loans, a rate twice as high as white business owners. According to a recent report, banks discouraged black business owners to apply for the Paycheck Protection Program – a relief program for business owners to survive the COVID-19 crisis.

3. Fortifying Local Economies & Communities:

A business supports a family, a market, a society, and other businesses. Black-owned businesses have had to struggle to establish a base that paved the way for progress for their families and communities in different directions. By supporting black-owned businesses, we support families, employees, and other businesses who are interdependent. Financial support to one business can boost the market of the entire locality encouraging investments, no matter big or small.

The pandemic is not ending anytime soon which means that the economy will be in a slumber for quite a while and social distancing and staying at home is and will be the new normal. If we just stand by and watch the disastrous trend of black-owned businesses shutting down, we are beckoning a crisis that may loom even after the pandemic is over and the economy is back on track.

It’s time we spend to support, not just buy.