As protests against systemic racism continue and statues of slave owners and white supremacists are toppled, a much-less photogenic and wonkier revolution has begun. From the U.S. Senate to think tanks to local nonprofits, economic injustice and wealth disparity are hot topics—for the fundamental reason that without confronting these issues, minority communities will remain in poverty. The equation is simple: Economic injustice, fueled by centuries of racism, equals poverty.
The link between entrepreneurship and escaping poverty is well documented. Former investment banker Devin Thorpe, in an article for Forbes.com, wrote, “Entrepreneurship—especially social entrepreneurship—brings value to the fight against poverty that other players—governments, corporations and non-governmental organizations (NGOs) don’t.”
The Covid-19 pandemic has both exacerbated the problem and forced a confrontation with it. Still attempting to recover from the Great Recession (during which Black households lost 40 percent of wealth, according to the Social Science Research Council), Black-owned businesses have taken another huge hit.
A study published this month for the National Bureau of Economic Research by Robert Fairlie at the University of California, Santa Cruz, stated that from February to April, the number of actively working Black business owners fell 41 percent.
“Although there has been a partial rebound,” the study noted, “the number of actively working African-American business owners remains 26 percent lower than in February 2020, which is the highest for any major racial/ethnic group.”
The federal government’s $670 billion Paycheck Protection Program (PPP) didn’t help micro-businesses that don’t have employees. It didn’t work for small businesses—many of them Black-owned—that did not have long-established relationships with banks. Now, even with a new proposal on the Congressional table that would allocate $50 billion in grants, instead of loans, to state and local governments for the truly small businesses, as well as nonprofits, it’s cities, local agencies and in some cases, individuals, that have stepped up to help Black-owned businesses survive.
By March, the Oakland African-American Chamber of Commerce was receiving calls from small business owners desperate to save their livelihoods. These calls were very hard to listen to, said Cathy Adams, the chamber’s president and CEO. She knew something had to be done to help. One of the organization’s 210 active members called to say they had some connections in the business community who might step up. Adams stayed up most of one April weekend brainstorming, and by the end of it, had mapped out the concept for the Resiliency Relief Fund. Members and other funders would contribute to a $1 million goal, which would then be used for grants to struggling businesses. Adams referred to this idea as “utilizing our own eco-system.”
By the first week in July, the fund had received more than 78,000 individual donations, as well as major support from corporations such as Clorox, which donated $200,000. Adams was confident the original goal would be met, and that of the 158 applications in the first round of granting, all applicants who qualified would receive some assistance.
“Each business that gets a grant will also be required to take our Business Financial Training class,” Adams emphasized. The course teaches proper preparation of profit-and-loss statements, for example, required by most funders. “This is giving us an opportunity to reboot and emerge stronger,” she said.
Adams has also reached out to the greater Bay Area business community, citing a positive networking session with the San Anselmo Chamber of Commerce, some of whose members made personal contributions to the Resiliency Fund.
Chamber member and micro-business owner/CEO Ariana Marbley of Esscents of Flowers was lucky in one sense—she has no brick-and-mortar location. All ordering is done by phone or online, so she did not need to close her doors. But the four-year-old business lost a huge percentage of its income when weddings and other events placing big floral orders were canceled by rules prohibiting large gatherings.
Although her delivery service was still operating, initially she had no access to flowers, as the Oakland Flower Market shut down. Marbley reconnected with another small business, West Oakland’s Boxcar Flower Farm, and was able to continue to make 10–15 deliveries a week. Then she had an inspiration. She created a “yellow rose campaign,” in which a yellow rose was delivered to individuals to honor the protests over George Floyd’s and others’ deaths. Hundreds of people participated, many learning about the business for the first time.
With no employees, Marbley didn’t qualify for the PPP, but she has since received a small loan from the Emergency Injury Disaster Loan program. She’s also applied to the Runway Project, founded to help close the wealth gap between Black and white entrepreneurs. She has continued to partner with other Black-owned businesses, including Los Angeles–based Two Chicks in the Mix, which bakes mini-cakes to be delivered with Esscents of Flowers’ arrangements.
Esscents of Flowers deliveries have now increased to 40–60 per week, and Marbley is looking to hire her first part-time employee.
Another Oakland organization finding ways to cope is the Black Arts Movement Business District/Community Development Corporation (BAMBD/CDC). Founded in 2016 by theater-artist Ayodele Nzinga, the District itself is still awaiting promised funding from the city to expand its mission of promoting Black artists and entrepreneurs in an area stretching along the 14th Street corridor.
Nevertheless, Nzinga has organized Rapid Response Funding, channeling grants and donations to individuals and businesses directly impacted by the pandemic. The BAMBD/CDC site features an extensive list of resources available to small business owners.
And although the second annual BAMBD Festival, funded by the California Arts Council, will now be virtual, it will still feature performances by theater artists, musicians, dancers, comics, poets, youth groups and “town legends” from Aug. 1–31. Both free and paid arts events, gallery installations, ways to support virtual vendors, and virtual public symposiums will be presented.
In Richmond, the Richmond Main Street Initiative, devoted to revitalizing the downtown district, promotes its small and micro-business members through a weekly blog, “Heart of Richmond.” Black-owned businesses are featured and their online sales potential emphasized.
Osaretin Ogbebor’s Rich City Apparel is one of these. Housed in the newly revamped Richmond Visitor Center, the company opened in January, and by March, “was ramping up to full-time hours,” according to Ogbebor. The pandemic stopped this progress in its tracks, but the company has maintained successful online sales, even developing a mask with the “Rich City” logo.
“Once this is over, we’ll be at full strength,” Ogbebor said.
Another featured member is Blessed Kiss Cosmetics. Callie Green and Manika Dodson founded the company in 2016, using pop-up shops and events around Richmond, Oakland, San Jose and as far afield as Stockton and Sacramento to sell their cruelty-free products. When the pandemic hit, “85 to 90 percent of our business was gone,” said Green, as the pop-up shops could not operate and events were canceled. Like Esscents of Flowers, micro-business Blessed Kiss wasn’t eligible for a PPP loan.
But they were not willing to give up on their dream enterprise.
“We are re-engaging with our customers on social media, generating more repeat customers,” said Green.
She described the process as “coming back to the table,” resourcefully gaining broader recognition for their brand, and innovating, such as working to add demo videos to their site.
“Businesses like ours create better communities,” said Dodson, emphasizing that organizations such as the Richmond Main Street Initiative should be empowered to act as fiscal receivers for businesses such as Blessed Kiss. “They are our voice.”
The Bay Area–based Renaissance Enterprise Center has also stepped up.
“Our mission has always been to serve the under-represented in the economy,” said executive director Bret Sweet. He noted that in 2019, the Center assisted 636 clients from Antioch to Richmond to Oakland to San Leandro, and of those, 199 were Black.
He described a “three-pronged approach” to supporting Black-owned businesses. First, “preparation,” including entrepreneurship training tailored to fit the needs of Black owners and operators.
“One example of this is an introduction-to-entrepreneurship course geared to Black Oakland residents who are on probation and would not qualify for normal funding,” Sweet said.
Second, “protection,” which involves facilitating insurance and protections for Black businesses affected by civil unrest, as well as servicing relief funds and loans to Black entrepreneurs shut down by the pandemic. And third, “promotion”—making available a list of Black graduates of the Center’s programs, and encouraging supporters to buy from them.
“We are also exploring how to develop our own grant program for microenterprises in Contra Costa County,” Sweet said. “We hope to expand it to Alameda County if we can get it up and running.”
Yet all of these efforts, effective as they are, cannot solve the fundamental problems of income inequality. One major issue, as encountered by the business owners interviewed, is access to credit and loans.
The Washington, D.C.–based Black Economic Alliance (BEA) published a white paper this year advocating modifying “opportunity zone tax policy to incent new business formation and employment,” as well as supporting entrepreneurship by incenting venture capital and private equity firms to invest in opportunity zones by offering favorable carried interest tax rates.
The same organization sent out a call in April calling for 35 percent of Small Business Administration funds to be allocated to community development financial institutions (CDFIs) and minority financial institutions, and doubling banks’ processing fees for stimulus funds distribution in opportunity zones, marketing the program through Black media outlets.
Said BEA executive director David Clunie, “The pandemic has exposed the results of a centuries-old American system of laws, policies and practices that have intentionally oppressed Black people for the majority of our country’s history. We need to upend the status quo that has prevented Black Americans from true economic inclusion and create new opportunities for Black communities to play a necessary role in building a stronger, more inclusive and more resilient economy.”
Clunie emphasized that the recovery’s success “continues to rest in the conscience of our government leaders to prioritize support for the most disinvested communities in America, and boost access to financial resources for Black people, businesses and institutions in this country.”
Marco Rubio, the U.S. Senate’s Small Business Chair, has said that although even a revamp of the PPP would still likely rely on established big banks, he is putting forward plans for loans favoring businesses that earn most of their income in low-income communities. He also favors setting aside $25 billion in forgivable loans to businesses with 10-or-fewer employees.
And at the most grassroots level come the proposals from the nationwide Poor People’s Campaign. Its platform was presented to an estimated online audience of 2.5 million people on June 20–21, generating an estimated 300,000 letters to governors and Congressional representatives. Although none of the platform planks directly address businesses, acceptance of its calls for radically reprioritizing the federal budget to address the needs of the 140 million Americans who fall below the poverty line would undoubtedly help float many Black-owned business boats, according to Nell Myhand, a steering committee member of the Bay Area chapter of the Poor People’s Campaign.
“We need to hold our elected officials accountable for their actions—and inaction—on the issues that impact the Black community the most,” said the BDE’s Clunie. “The pandemic has demonstrated that lives are at stake, in the short and longer terms, so politics as usual is unacceptable.”
“What we are doing now is what we should have been doing years ago,” Cathy Adams said.