It is not news that the coronavirus pandemic has rendered many businesses bankrupt, right from global giants to struggling startups. Covid-19 has swept across all industries leaving behind a trail of joblessness, losses, and bankruptcy in its wake. The pandemic is gender-neutral as it is color blind. However, it has amplified the challenges that black-owned businesses faced pre-covid.
To better understand this, we have to dive deeper into the banking system that has been predominantly skewed towards white-owned businesses. Racism in the industry continues to plague businesses owned by people of color. Disparities in banking have continued to plague the growth of black businesses in significant economies. In the US, 41% of small businesses owned by blacks collapsed compared to only 17% owned by whites, according to a recently published report by the Federal Reserve Bank of New York. Accessing Covid-19 resilience funds for black businesses has been equally challenging.
The Small Business Administration launched the paycheck protection program marred with irregularities in providing relief to businesses. Instead of benefitting small businesses, large corporates such as GoDaddy, Rick’s Cabaret, and other giants became the largest recipients. A recent poll published by VOA, the paycheck protection program or the economic injury disaster loans program denied 23% of black businesses than 9% of white-owned companies. In Michigan state, the PPP loans provided only three black-owned companies than 223 restaurants identified as white-owned enterprises.
The widespread closure of businesses around the world due to the covid-19 pandemic is unprecedented. Most companies have closed due to policy changes or a fall in demand for their products and services. Many of the closures will be permanent due to businesses’ inability to pay ongoing expenses during the lockdown. According to statistics from February through April 2020 on the effects of coronavirus on small businesses in the United States, African-Americans experienced the most significant losses, eliminating 41% of business owners.
Industries dominated by black businesses suffered a devastating blow, except for the agriculture sector. Black businesses essentially felt an effect on hotels, restaurants, construction, and transportation sectors decline in business activity.
For the most significant impact in future pandemics, relief programs should eliminate gaps for the hardest hit communities that lack critical infrastructure and are inherently disadvantaged.