Updated: Dec 15, 2021
August marks National Black Business Month, a month in which Black businesses and Black entrepreneurs are recognized and celebrated for their successes, milestones, and historical progress. The past year and a half has disproportionately impacted Black businesses being forced to close during the pandemic, namely because of a lack of access to capital, resulting in a 40 percent drop in Black business ownership.
In spite of it all, Black businesses continue to grow and succeed – black businesses and women-owned businesses have persevered despite the setbacks caused by the pandemic. This report shows over sixty percent of black business owners plan to expand the business within a year, while over fifty percent plan to invest in marketing and extra staffing. Still, recognizing, supporting, and celebrating National Black Business Month this year may be more important than ever as Black businesses continue to recover from the economic losses caused by the pandemic.
Overall, the most common downfall of black-owned businesses is a lack of access to capital. Many new business owners choose to front the startup with their own cash, a risky venture to say the least. Take a look at these staggering black-owned business statistics:
44% of Black business owners use their own cash to start their venture
58% of Black business owners said their business’s financial health has been “at risk” or “distressed” during the pandemic
37.9% of Black business owners say they have been “discouraged” from apploying for business loans
The Answer to Access to Capital – CDFIs
A helpful answer to the question concerning a business’s access to capital is the use of CDFIs. Community Development Financial Institutions share a common goal of expanding economic opportunity in low-income communities by providing access to financial products and services for local residents and businesses. Whether it’s the credit union down the street or a nearby small business loan fund, your community may be home to an organization known as a CDFI.
CDFis can be banks, credit unions, loan funds, microloan funds, or venture capital providers. CDFIs help families finance their first homes, support community residents starting businesses, and invest in local health centers, schools, or community centers. CDFIs strive to foster economic opportunity and revitalize neighborhoods.
There are certified CDFIs scattered through every state. You can find a list of Pennsylvania CDFIs here. If you require any further business services, the business attorney team at Fiffik Law Group is always available to assist you. Reach out if you have any further questions.