Report: For Black business owners, economic recovery is hobbled by Pre- Existing Conditions and Inequality

Before the pandemic, Black Entrepreneurship was on the rise, but revenue and wealth weren’t.

Black America was in an economic crisis before COVID-19, and recovery for Black-owned businesses will require solutions to the economic preconditions that made success and wealth accumulation so difficult to achieve before the pandemic, a new report found.

The report, from the National Community Reinvestment Coalition (NCRC), investigated the lethal pre-existing economic conditions for Black-owned businesses and the impact racial wealth inequality has had on entrepreneurship, particularly how it shapes the prospects for COVID-19 relief and recovery for Black entrepreneurs. 

While the number of Black-owned businesses had grown significantly in the decades before the pandemic, their share of revenue generated had remained mostly stagnant, the report found. The racial disparities in entrepreneurship mirrored overall racial economic inequalities in the United States, including deep asset poverty of Black communities, systemic inequality and the historic denial of wealth-creating opportunities.

Black income and wealth disparities, coupled with low revenue generation among Black businesses, low rates of pay and the challenges Black firms faced to attract capital from financial institutions, all contributed to the limited income and wealth return of Black business ownership before COVID-19 decimated the economy broadly, and Black-owned business in particular.

“We need initiatives that seek to strengthen the overall state of Black wealth to stimulate Black entrepreneurship,” said report co-author Dedrick Asante-Muhammad, NCRC’s Chief of Race, Wealth and Community. “To focus primarily on COVID-19’s negative impacts is a failure to recognize the poor economic health of Black entrepreneurs before the COVID crisis.”

The report outlined a set of policy recommendations to address the pre-existing racial wealth and income disparities that were obstacles to Black entrepreneurship before the pandemic. 

Suggestions for policy consideration include direct stimulus payments in concentrated areas of Black business; investments in Black-owned, Black-led banks and institutions; and transparency around data collection practices for small business lending. 

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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