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Black-Owned Businesses See Wave of Support But Still Face Barriers, According to Survey

Black-Owned Businesses See Wave of Support But Still Face Barriers, According to Survey

Business owners share successes and setbacks

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August is National Black Business Month, a holiday that encourages Americans to support and celebrate Black-owned businesses. In the wake of protests sparked by the death of George Floyd and in support of the Black Lives Matter movement, many people across the country are looking for ways to support Black businesses.

A new survey from Groupon and the National Black Chamber of Commerce of more than 400 Black small business owners found that Black-owned businesses have seen an uptick in business in 2020. However, the survey also reinforced that Black entrepreneurs continue to face discrimination and inequalities when it comes to starting their own businesses. Here are the major trends the survey found about Black business owners and the struggles they face.

Hot search topic

Hot search topic

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Websites, search engines and apps have all seen surges in searches for black-owned businesses, including clothing brands, makeup lines and restaurants. Groupon reports it has seen searches for Black-owned businesses increase more than 300% on mobile since early June 2020.​​

Elevating Black-owned businesses

Elevating Black-owned businesses

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Many companies responded to the demand for Black-owned businesses by elevating them on their sites and apps. For example, Etsy introduced a new Black-owned Etsy shops section on its homepage, while delivery services such as Postmates and Uber Eats began promoting Black-owned businesses in their apps. There are many other resources available as well if you’re looking for ways to support Black businesses.

Increase in business

Increase in business

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The survey found that 75% of Black business owners have seen an increase in business since the protests sparked by the death of George Floyd began.

Pride in their business

Pride in their business

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Almost 80% of survey respondents said they’re more proud than ever to be a Black business owner.

Reasons for entrepreneurship

Reasons for entrepreneurship

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Black business owners start their own businesses for a variety of reasons. According to the survey, 65% did so to pursue their passion, 63% did so to have more control over their future career, 63% did so to be their own boss, 47% did so to have a flexible work schedule and 42% did so to help their local community thrive.

Path to success

Path to success

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If you’re a small business owner yourself, don’t be frustrated if you don’t turn your humble beginnings into major successes overnight. Nearly half (47%) of the survey respondents said it took between three and six years for their businesses to get off the ground and become successful.

More challenges faced by Black owners

More challenges faced by Black owners

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Even after working hard and following smart strategies for saving money to get their idea off the ground, 80% of respondents said they faced more challenges launching their businesses due to their race.

Facing racism

Facing racism

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Almost 60% of respondents also reported that they were victims of racism or bias when starting their businesses.

Lack of investment and resources

Lack of investment and resources

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Of the 400 business owners surveyed, 74% said they’ve had fewer opportunities due to a lack of capital investment and resources targeted toward Black communities.

Harder to get loans

Harder to get loans

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While this survey is based on the personal experience of Black business owners, national data backs up the fact that Black business owners face racism and discrimination. According to data from the U.S. Federal Reserve, Black business owners are denied loans by banks more frequently than any other racial group. Black-owned businesses are also the most likely to have applied for a credit card and experienced the highest turn-down rate.

Held to a different standard

Held to a different standard

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The majority of Black business owners (84%) said they were held to a different standard than other ethnicities. However, they identified putting in hard work, taking pride in the quality of their product or service, having an innovative business idea, hiring the right people and building strong community relationships as some of the keys to their success.

Disproportionate ownership

Disproportionate ownership

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Black people make up more than 13% of the U.S. population. However, according to a Brookings Institute analysis of the Census Bureau's most recent survey of U.S. businesses in 2017, there were 5.7 million U.S. firms with paid employees, and only 124,004 — or 2.2% — were Black-owned.

Impact of COVID-19

Impact of COVID-19

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The coronavirus pandemic has affected everything from the housing market to schools to how Americans travel. It’s also affected Black communities and businesses. Of the survey respondents, 76% said they were negatively impacted by COVID-19. On top of that, only 5% of those that applied for a Paycheck Protection Program loan received one.

Hit the hardest

Hit the hardest

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While many companies and jobs have been impacted by the coronavirus pandemic, Black business owners have been hit the hardest. According to a report published by the National Bureau of Economic Research, 41% of African-American business owners closed their doors between February and April 2020 and the number of African-American business owners plummeted from 1.1 million to 640,000. If you’re looking to support local businesses and uplift your community while continuing to practice social distancing, here are small acts of kindness that can be done from home.

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