Black-owned businesses are:
- Growing, but still underrepresented.
- Often shut out of financing.
- Starved for venture capital investment.
- Underrepresented among government contracts.
The 2024 State of Black Business report, just released by the Alliance for Entrepreneurial Equity, finds that Black entrepreneurs face persistent obstacles in getting access to capital, markets, and resources.
For our nation’s economic strength and resiliency, it’s imperative to remove systemic barriers and foster a more equitable ecosystem for entrepreneurs. But activists against racial justice, backed by dark-money foundations, are intent on preserving racial inequality by tearing down programs and initiatives aimed at leveling the playing field.
The Alliance, a partnership of the National Urban League and Third Way, produced the report to arm the public, experts, advocates, and policymakers with current and comprehensive data on the state of Black businesses in America and underscore the urgency of advancing equal opportunities for Black communities and other communities of color.
Between 2018 and 2021, the number of Black-owned businesses with at least two employees grew by 30%. But despite the fact that Black Americans make up more than 14% of the population, Black businesses account for only 2.5% of all the nation’s businesses.
Black-owned businesses tend to be smaller and newer than other businesses. Only about 3% have more than 20 employees, and three in four have fewer than five employees. Nearly half are less than two years old, and two in three are less than five years old. In comparison, only 19% of white businesses are less than two years old.
Keep up the fight against systemic inequality
Black business owners, more than any other demographic, experience pervasive barriers to accessing capital, which impacts their ability to start and grow businesses. Half of Black-owned businesses applied for a loan, and the most common reason for applying was to meet operating expenses (68%) and to expand business operations (64%).
The lack of access to capital is a major reason why Black Americans are less likely to own their own businesses and why their businesses remain small. Black-owned businesses are denied financing far more than anyone else, with 40% completely denied loans, lines of credit, and cash advances, compared to only 18% of white-owned businesses. Only 32% of Black businesses are fully approved for the financing they seek, compared with 56% of white businesses.
Those Black-owned businesses who are able to obtain financing from credit unions, banks, and online lenders are more likely than other businesses to be offered a high interest rate. As a result, 53% of Black business owners have higher debt payments, 38% are forced to delay plans to expand their business, and 28% have a hard time refinancing their existing debt.
Disparity in venture capital funding is even more dismal. After a slight increase in VC funding directed to Black-owned businesses following the racial justice uprising in 2020, the last three years have seen a steady decline. In 2023, only 0.5% of VC funding went to Black business founders.
The promises of racial justice that America made in the wake of George Floyd’s murder cannot be abandoned. The efforts to distort the nation’s history of racial oppression and discrimination, the silencing of Black voices in classrooms, the dismantling of affirmative action and diversity, equity and inclusion policies are part of a coordinated campaign to preserve systemic inequality.
No doubt, these opponents of racial justice would suppress this very report, if they could.
The Alliance for Entrepreneurial Equity is working on a national policy platform to encourage Black and minority entrepreneurship, including expanding access to new markets, access to capital, increasing technical assistance, streamlining antiquated licensing, and more.
As the Alliance’s Imani Augustus and Madeline Burke recently noted, if Black-owned businesses were proportionate to population, the United States would see 7 million more jobs and $733 billion more in sales and revenue. We can’t allow fear and resentment to stand in the way of equal opportunity and economic prosperity.
Marc H. Morial is president and CEO of the National Urban League and was mayor of New Orleans from 1994 to 2002. He writes a twice-monthly column for the Sun-Times.
Send letters to letters@suntimes.com
The Sun-Times welcomes letters to the editor and op-eds. See our guidelines.
