Black-Owned Businesses Face Greater Fallout From COVID-19

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Black-Owned Businesses Face Greater Fallout From COVID-19
McKinsey reports 40% of revenues from black-owned businesses are in the most vulnerable sectors of the economy.
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Ever since the shutdown began, the Chicago-based restaurant Batter & Berries has been running on takeout and delivery. Like a lot of other small businesses, its owners applied for state and federal economic relief — but have yet to receive any money. 

“We’re starting to have to put some of our personal money into the business to keep it going,” said co-owner Craig Richardson. 

The coronavirus pandemic is making it difficult for small businesses to get by, even with emergency loan assistance. And recent studies show that it’s particularly hard for black-owned businesses. Based on the way the past month has gone, Richardson is concerned about whether Batter & Berries will be able to survive.

“I think I’d be delusional not to be. Most restaurateurs that I’ve talked to kind of have that same feeling,” Richardson said. 

Richardson is one of millions of small business owners who are in dire need of financial aid as the pandemic continues. But it’s uniquely challenging some business owners more than others.  

“Forty percent of all black business revenues are concentrated in the industries that are having the worst time in this economy,” said Jason Wright, partner at McKinsey & Co. consulting firm and co-author of "COVID-19: Investing in Black Lives and Livelihoods."

That compares to 25% of revenues for other businesses in the U.S, according to a new report from McKinsey. It’s one of several economic disparities that could be exacerbated by the pandemic and its potential impacts. 

It doesn’t help that the first round of stimulus money set aside for small business loans — $349 billion — already ran out. And the problem is underscored by record unemployment. 

The good news is another round of financial relief is in the works. But efforts to make sure the funding is distributed evenly could be crucial to the economic recovery for black business owners and workers. 

“All of these things are good. But there’s an equity lens that can be applied to them to ensure that it helps the most vulnerable communities,” Wright said.