COVID-19 has disrupted life on all fronts, not just in public health. One of the most impactful, lasting consequences of the pandemic is the ongoing recession harming business owners worldwide. Research shows the recession isn't impacting all businesses equally, either. Black-owned businesses are feeling the effects of the COVID-19 recession more dramatically than their white-owned counterparts.
A recent study from the Federal Reserve Bank of New York found that Black-owned businesses declined by 41 percent between February and April. By contrast, white-owned enterprises fell by only 17 percent, according to the same report.
Black businesses tend to be more geographically concentrated than others, often appearing in larger urban centers. These areas also happen to be some of those that have endured the most severe COVID-19 outbreaks. Roughly 63 percent of counties with high concentrations of Black enterprises are in the 50 areas with the highest concentration of COVID-19 cases.
These geographic disadvantages aren't the only factor behind the difference in how severely the recession is affecting Black-owned businesses. On average, white-owned businesses had access to more resources to help them through the pandemic. Since many Black-owned enterprises didn't have the same resources, they had a harder time surviving.
Many Black communities are still feeling the effects of past racial injustices. For generations, Black Americans couldn't access the same education, property, or jobs as white Americans because of discriminatory laws and society. Though these prejudices began to fade, Black citizens are still largely at a disadvantage because their families weren't able to build the same levels of resources over time.
Times of crisis tend to highlight the effects of this history of injustice. Many Black-owned businesses were still recovering from the Great Recession of 2008 when the COVID-19 pandemic hit. Since they were still struggling from past hardships, they didn't have the resources to survive the present crisis.
The Paycheck Protection Program (PPP) helped many small businesses survive the recession, but it helped fewer Black enterprises. One report found that only 23 percent of Black-owned businesses obtained a bank loan, compared to 46 percent of white-owned small companies. A lack of strong banking relationships led to fewer Black-owned companies receiving PPP loans.
In states with high concentrations of Black businesses, only 20 percent of eligible firms received a PPP loan. That figure was typically lower for counties with higher rates of Black-owned business activity. Without this monetary support, Black-owned enterprises lacked the tools necessary to stay afloat.
A lack of change in other government processes may put further pressure on Black businesses. In New York, for example, the Division of Tax Appeals has not extended its deadline for filing a petition. Recession-hit firms in need of tax assistance may not have had the time to request the help they needed.
Amid these hardships, there is still hope for Black-owned enterprises in the pandemic. In the wake of nationwide protests over racial inequality, several large corporations are donating to funds that are supporting Black-owned businesses as well as racial justice organizations. There are also steps that anyone can take to help these struggling companies.
Supporting these businesses by buying from them is one straightforward and effective step. Instead of purchasing goods or services from multinational corporations, people may consider getting these things from smaller, Black-owned businesses. Supporting movements and legislation that addresses their needs is another important way to help.
Recognizing the barriers that these businesses and their owners face is another step in the right direction. Society will have to address the underlying causes of this inequality to prevent future crises. Learning about these issues, bringing attention to them and supporting improved legislation are crucial for moving forward.
The effects of the COVID-19 pandemic have reached far past matters of health alone. Just as the recession has been hard on individuals, it continues to threaten businesses, especially Black-owned companies that don't have the same resources. A broader cultural shift can help these companies and future ones survive, but action is necessary.
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