“In order for there to be a great America, there must be a great Black America. In order for there to be a great Black America, we need great Black businesses.”
Ron Busby, Sr. - President and Chief Executive Officer, U.S. Black Chamber Inc.
For the last 12 months, a dedicated group of entrepreneurial champions has collaborated to better support historically underserved entrepreneurs in the Valley. In celebration of one year’s worth of work, and in conjunction with Black History Month, we’re sharing who these champions are, what they’re up against, and why they do it anyway.
The State of Black Business
In 2019, the U.S. economy had a total of 5.7 million employer firms (firms with more than one employee). Even though Black people comprise 14.2 percent of the country’s population, only 2.3 percent (134,567) of these employer firms were Black-owned (U.S. Census Bureau, 2022). Starting and maintaining a business in a volatile economy is hard, and Black entrepreneurs face additional barriers to success, in particular the lack of equitable access to capital, Black-focused business advisory, training, and mentorship, and access to corporate and government supply chains
Lack of equitable access to capital
In order to start or grow any business, entrepreneurs need capital. White families in America have eight times the median net worth ($188,200) than Black households ($24,100). With lower income levels and less collateral than White business owners, Black entrepreneurs are less likely to receive traditional forms of credit. A 2020 report by the Brookings Institute confirmed that “large banks approve about 60 percent of loan applications from White small business owners but just 29 percent of loan applications from Black small business owners.” (Brookings Institute, 2020). When it comes to high-growth startups that aim to raise venture capital (VC), Black founders raised just 1 percent of all VC funds in 2022, a drop from the 1.3 percent raised in 2021 (1863 Ventures, 2022).
Lack of Black-focused business advisory, training, and mentorship
In addition to funding, training, mentorship, and advisory services are key to business success. Yet the entrepreneurial support geared specifically toward Black entrepreneurs remains scarce. Although small business and startup support organizations are growing around the nation and making strides toward greater diversity within their programs and offerings, mentorship, consulting, and training for and by the Black community are few and far in between. "On the surface, Black entrepreneurs can participate in whatever bootcamp or workshops are available, however, in most cases, we do not always feel welcome. In most instances, we know and feel as though the space created to help businesses thrive was not created with us, African Americans, in mind.
Due to years of systematic racism, it is a challenge for African Americans to know and trust spaces provided by those in the economic development ecosystem. Remember, it was the same ecosystem that destroyed and displaced Black Businesses and residents in the name of urban renewal not long ago in the 50s, 60s, and 70s.
When we take a chance and participate in programming or sign up for resources intended for entrepreneurs, we know we must code-switch and dim our cultural perspective to fit into a space designed by and for predominantly white people. It’s just not the same as attending a training or one-on-one consulting session with another Black entrepreneur who knows what it’s like, who has a shared experience.”, says Councilman Chris Jones, Harrisonburg City Councilmember and one of the founders of B-Cubed.
Lack of access to corporate & government procurement
Furthermore, Black-owned businesses are not being fully utilized in larger businesses’ and government supply chains. The U.S. Census Bureau reported that Black-owned firms with employees account for $128 billion in receipts (0.33 percent of total receipts) compared to $13.3 trillion in receipts (34.6 percent) for White-owned businesses. In other words: When the government and or larger companies procure products and services, they rarely ever purchase from Black-owned businesses. Strengthening the position of Black-owned businesses in terms of federal contracting and procurement form government and private sector would increase access to these markets for Black entrepreneurs.
The Impact of Covid-19 on the Black economy
While the U.S. economy across the board experienced a downturn during the COVID-19 pandemic, Black-owned businesses were disproportionately negatively impacted. Between February and March 2022, Black business ownership dropped by over 41 percent across the United States. According to the Federal Research Bank of Cleveland, four of the six industries hit the hardest by mandated closures had sectors or subsectors with above-average minority representation. These mandated closures put additional strain on Black businesses that were already lacking equitable access to capital and business support. Due to long-standing system barriers to success, Black business owners were more likely to seek, and less likely to receive, additional private or government assistance. Of the $800 billion appropriated for the Paycheck Protection Program through the federal government, only 8.6 percent went to Black-owned businesses, reports the National Bureau of Economic Research (CBER 2021).
Community Navigator: A pilot program to bolster support of minority-owned businesses post-COVID
In 2021, the Small Business Administration launched the Community Navigator Pilot Program (CNPP) to provide targeted business support to historically underserved entrepreneurs across the United States. CNPP is an American Rescue Plan initiative designed to reduce barriers that all small businesses, especially those owned by disadvantaged groups such as veterans, women, and those from rural communities and communities of color, often face in accessing critical support. Through a Hub-and-Spoke model, 51 central Hubs support 450 so-called Spokes who directly provide assistance to entrepreneurs in their local communities (see a full list here).
The program has made great strides in its mission in just the first year! From December 1, 2021, to November 30, 2022, a total of
$172.45 million of total funding were approved
17,209 unique clients received 1:1 individual counseling (78,670 hours of counseling)
215,558 entrepreneurs were trained over the course of 80,971 hours of group sessions and workshops.
The Shenandoah Community Capital Fund (SCCF) was invited to join the Community Navigator Pilot Program (CNPP) in November 2021; the only recipient in the state of Virginia among 51 nationwide. Over the course of two years, SCCF functions as a central Hub to help fund and build capacity within a group of five partner organizations, Spokes, that are already working with women and Black and Brown entrepreneurs in the Shenandoah Valley.
These five Spokes are:
Institute for Entrepreneurship at Shenandoah University in Winchester (Northern Shenandoah Valley)
Black-and Brown-Business Growth Program (B-Cubed) in Harrisonburg (Central Shenandoah Valley)
RISE Organization in Waynesboro (Central Shenandoah Valley)
Grow Waynesboro in Waynesboro (Central Shenandoah Valley)
The Walker Program in Lexington (Southern Shenandoah Valley)
In its first year of the pilot, the Shenandoah Valley Community Navigator has provided
184 unique clients with
665 hours of technical assistance in 1:1 individual counseling sessions,
292 training hours, and
Close to $290,000 in funding through grants and microloans.
Each of the Shenandoah Valley spokes is united by a common goal and has taken steps to achieve that goal in its own unique ways. Shenandoah University hosted a 9-week business training program with 10 participants in the summer of 2021, and is working to cultivate a more entrepreneurial mindset among its students and those in the community!
B-Cubed, a partnership among the City of Harrisonburg, Harrisonburg Downtown Renaissance, and the Shenandoah Valley Small Business Development Center provides a range of services and resources to assist businesses. During the first year of the Community Navigator Pilot Program, B-Cubed supported 35 Black business owners in Rockingham county and was able to provide 18 of them with mini-grants to foster their growth! Read more about B-Cubed here.
As a voice for the Black community in Waynesboro and beyond, RISE Organization takes a comprehensive approach to support not only Black entrepreneurs in starting and managing their businesses, but the Black community at large through their efforts to facilitate race relations, expand anti-racism and diversity training, and lead conflict in conflict resolution.
RISE is also known for its annual two-day Women’s Summit and Stakeholder Summit to build understanding and deeper relationships within their communities. The 5th Annual Women’s Summit is taking place May 20th at the RISE headquarters! Read more about RISE here.
Neighbors to RISE, Grow Waynesboro is a business support and development program sponsored by the Office of Economic Development for the City of Waynesboro. The program aims to support local entrepreneurs of all backgrounds in starting and growing their businesses through training, mentorship, and business planning. In its first year under Community Navigator, Grow Waynesboro invested heavily in outreach and launched a highly popular monthly startup coffee hour, Coffee and Connections, that grew from a handful of entrepreneurs to more than 20 within a few months!
The Harry Lee and Eliza Bannister Walker Entrepreneurship Program - The Walker Program is working to revitalize Black businesses in Lexington, VA, a once important destination in the Motorist Green Book. Now, five years after the last Black-owned storefront in the area shut down in 2018, The Walker Program has worked with close to 30 Black entrepreneurs, five of whom opened physical storefronts, initiating a renaissance of Black business in the Southern part of the Shenandoah Valley. Read more about The Walker Program here.
Over the next month, we will honor the history and potential of Black entrepreneurs in the Valley by highlighting the accomplishments of our partner organizations, and the incredible entrepreneurs with whom they work.
Strengthening Black-owned businesses for prosperous communities
Despite the hardships they’ve faced, Black-owned businesses are resilient and faster growing than any other demographic of business owners (SCORE 2022), which also makes them a key driver in closing the racial wealth gap in America. In a 2020 report, CITI found that “not addressing racial wealth gaps between [Black and White Americans] has cost the U.S. economy up to $16 Trillion over the last 20 years.” (CITI 2020). If we were able to close four key racial gaps for Black communities - wages, education, housing, and investment in Black entrepreneurs - $5 Trillion would be added to U.S. GDP over the next five years. We at SCCF believe that this fourth pillar - entrepreneurship - is a powerful driver to ensure equity, prosperity, and generational wealth in our communities across the Shenandoah Valley, and are grateful for the opportunity to work with such incredible support organizations to address this necessary change.
Subscribe to our newsletter for new stories every month!
Comments