Resilient Black Business Owners Aim for More Financing and Growth Despite COVID-19
Here is a thought-provoking statistic: 41 percent of Black small business owners are more likely than the average 32 percent of small business owners to seek additional financing to address challenges their business faces.
The data are telling as minority entrepreneurs often don’t apply for small business loans due to fear of rejection or they will get lower amounts and higher interest rates if approved.
The latest finding was shared with BLACK ENTERPRISE by JPMorgan Chase. The bank’s Small Business Pulse Survey polled 1,000 small business owners to learn about their financial and strategic business priorities and how the firms are doing after two challenging years of economic uncertainty.
The report surveyed 150 Black small business owners. Feedback reflects the findings of those respondents, but not all Black SBOs in the overall survey.
Ben Walter, chief executive officer of Chase Business Banking, provided some email responses tied to the financing and other survey findings. Chase Business Banking provides financial advice along with deposit, credit, and cash management products to 4 million small business owners with up to $20 million in annual revenue.
Why are Black small business owners more likely to seeking additional financing to address challenges? What are the top reasons for it?
According to a recent report by the JPMorgan Chase Institute, “Black Americans generally have less wealth than their white peers, something also true for Black SBOs [small business owners],” Walter says. He adds that Black business owners start with less liquidity to invest in their firms and need access to capital sooner to help their businesses thrive.
Walter notes, with confidence, that rebounding Black entrepreneurs are looking to scale their businesses by investing in their workforce, digital tools, and other capital expenditures, all of which may explain the additional need for funding.
“We’re also seeing an increased interest in entrepreneurial training and mentorship among Black business owners as a result of the challenging macroeconomic environment.”
Walter says Chase’s new mentorship program has already supported more than 1,200 minority entrepreneurs by providing critical access to expert coaching, technical assistance, and workshops to help them build the foundation to grow their business.
To boot, 73 percent of Black entrepreneurs revealed they are more probable to expand their workplace benefits in the next year versus 63 percent of total respondents. Walter says small business owners now need to have a differentiated value proposition when it comes to hiring and retaining talent, and thus are investing in incentives, benefits, and training while increasing wages.
“We know that Black business owners were disproportionately impacted by the pandemic and were cutting staff and closing businesses at higher rates than their white counterparts.” Walter says this survey data may suggest that Black business owners are making up for what they lost over the last two years while planning for more accelerated expansion plans over their peers.
Another survey discovery revealed that 58 percent of Black business owners are more likely than 33 percent of white business owners and 43 percent of Hispanic business owners to say their outlook for their business has become more positive since the onset of the COVID-19 pandemic.
New business formation is at an all-time high, he adds, with a particular boom in Black-owned businesses as data suggests that the number of Black Americans who opened a business was nearly 30 percent higher in 2021 than at the start of 2020.
Last year, Kristel Bell, founder of Surprise Powerz in Chicago, launched her toy manufacturing company that instills self-confidence in pre-school-aged girls by selling STEM-themed dolls.
She says she expects her business in 2023 to see new growth and financial opportunities.
“The grit and resilience we’ve shown in just one year of business makes me confident for the year ahead,” she says.
“Knowing I have a financial partner (Chase) that understands my business model and helps find new growth and financing opportunities gives me peace of mind and inspiration to keep moving forward.”