Why Are Black Owned Businesses So Expensive?
The government continues to overlook Black-owned firms, even as it seeks to encourage small business lending in the area. Founders of Black firms such as Shernett Swaby black-owned businesses have traditionally been under-served by federal small business programs, such as the Paycheck Protection Program, which was introduced to help businesses survive during the COVID era's severe restrictions. Ninety-five percent of Black-owned firms were excluded from the program's early round, which meant that they had to wait for longer to access funding.
The question of whether Black owned businesses are costly is a complex one. There are many reasons for that, but one of the biggest is simply because they create jobs. This is why it is important for the public to support Black businesses. The social and private sectors have an obligation to create jobs, and in many cases, these businesses are expensive. For that reason, there is an increasing demand for Black-owned businesses. In response, there are a growing number of new companies opening up in the Seattle region.
While a lack of capital limits the economic mobility of Black entrepreneurs, a lack of knowledge prevents them from achieving their full potential as job creators. Removing regular corporations from a survey cohort would reduce the number of Black businesses by nearly two-thirds and their employment by almost 50 percent. The question remains, "How can we create more economic opportunities for Black people?"
Increasing revenue for black owned businesses in Chicago is a challenge for many Black entrepreneurs. They often lack access to capital and may have limited opportunities to expand. According to a Crain's Chicago Business report, Black entrepreneurs are focused on three key areas: revenue growth, creating jobs, and entering sectors with high growth potential. Those who do not have the capital to expand are a logical choice, but how do they get there?
Traditionally, black-owned businesses have been underserved by federal programs that support small businesses. The Paycheck Protection Program, which was introduced to combat COVID restrictions, excluded 95% of Black-owned firms in the early rounds of funding. Those firms that received funding had to wait longer for the funds. The Paycheck Protection Program was a partial solution to this issue, but it was slow to reach the majority of Black-owned businesses.
Historically, small businesses owned by African American and other minority people have faced a higher risk of being denied a bank loan. But recent studies show that Black-owned firms are just as likely to apply for loans as companies that are owned by white people. In fact, a recent survey found that one-third of Black-owned firms with at least one employee were able to obtain bank funding in the past five years.
Among the biggest challenges for black entrepreneurs is accessing capital. Despite the lack of available credit, Chicago's City Treasurer Kurt Summers is taking steps to ease the burden on small business owners by collaborating with lenders to help them secure loans. One such initiative is SimpleGrowth, an online lending marketplace designed to connect African American entrepreneurs with lenders and business assistance. The Chicago Small Business Development Center is currently working with several lenders to create an even more welcoming environment for Black business owners.
Cost of doing business
A high percentage of Black owned businesses in Chicago are forced to close due to high costs. These businesses are generally in service industries and operate with lower margins than their white counterparts. Moreover, they often lack relationships with banks and have difficulty obtaining capital and funding. The good news is that this disparity is narrowing. Today, more than half of black-owned businesses in Chicago are growing, with the number of new businesses created in the city at the fastest pace since 1996.
While many Black entrepreneurs view building a larger business as an equalizer, others see the opportunity for financial assistance as an obstacle to getting started. That's why it's so important for Black businesses to support their peers. There are many examples of successful Black businesses in Chicago. For example, Lita Selmon opened her lifestyle brand in Oak Park, selling natural apothecary products and organic products. With the help of her friends and family, she has received sufficient capital to start her own company.