May 14th 2024.
A recent report from the Alliance for Entrepreneurial Equity, a partnership between the National Urban League and Third Way, reveals the ongoing struggles faced by Black-owned and minority-owned businesses. Despite the increase in venture capital funding following the 2020 George Floyd uprisings, there has been a decline in funding for Black businesses, hindering their potential for growth and success.
According to The Chicago Sun Times, this report aligns with previous research highlighting the chronic underfunding of Black-owned businesses. The barriers to capital not only make it challenging for these businesses to start or expand, but they also disproportionately affect them. Shockingly, 40% of Black businesses are denied loans, lines of credit, or cash advances, compared to only 18% of white-owned businesses.
As Marc Morial, president and CEO of the National Urban League, emphasizes in his column for The Sun-Times, these funding disparities are part of a larger effort to maintain systemic inequality in America. He calls for the promises of racial justice made after George Floyd's murder to not be abandoned, as there are ongoing attempts to distort the country's history of racial oppression and discrimination.
It's currently National Small Business Week, yet Black businesses, their owners, and organizations aiming to level the playing field are under attack. Co-founder of the Fearless Fund, Arian Simone, shares her mission to fund Black female entrepreneurs and combat these challenges.
The Alliance for Entrepreneurial Equity's report sheds light on the realities faced by Black businesses. They tend to be young, with fewer than 20 employees, located in urban areas east of the Mississippi River, and concentrated in specific industries. They also generate less revenue and hold less debt than other businesses, making them perceived as "high-risk" investments and often denied financing and government contracts. Many must resort to non-traditional means to secure funding.
The report also addresses the disturbing trend of moving the goalposts for Black economic freedom, similar to what happened during antebellum America. The Civil War Amendments were meant to give social, political, and economic power to Black Americans, but opponents quickly began chipping away at these protections, depriving citizens of the economic freedom and fairness they deserved.
Recent legal challenges have targeted programs designed to promote equity in entrepreneurship, further exacerbating the obstacles faced by marginalized communities. As these efforts aim to dismantle affirmative action policies, it is crucial to have current data on the state of Black businesses in America. The report's goal is to provide analysis and strategies that can inform policymakers, advocates, and experts and spark targeted interventions to reverse systemic barriers and create a more equitable entrepreneurial ecosystem.
In conclusion, this report serves as a call to action to increase capital for Black women entrepreneurs and other marginalized groups. By addressing the barriers and inequalities faced by these businesses, we can work towards a more just and inclusive society.
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