Nearly half of Black businesses were closed due to the Covid-19 pandemic, according to a report by the New York Fed. They were twice as likely to falter as White businesses, the report found.
“The Covid-19 pandemic has exposed acute and deep-rooted connections between physical and economic health. Many of the same places hit hardest by the pandemic are reeling concurrently from the health crisis, business closures, and job losses. These communities are disproportionately communities of color,” the report said.
“Nationally representative data on small businesses indicate that the number of active business owners fell by 22 percent from February to April 2020—the largest drop on record. While the overall decline is noteworthy, differences among closure rates across racial and ethnic groups are even more striking. Black businesses experienced the most acute decline, with a 41 percent drop. Latinx business owners fell by 32 percent and Asian business owners dropped by 26 percent. In contrast, the number of white business owners fell by 17 percent.”
The government created the Paycheck Protection Program (PPP) to address the economic problems of America’s business community. According to the Small Business Administration between April and June, nearly 5,500 lenders distributed $521 billion in the form of 4.9 million loans with an average loan size of $107,000. These loans went to small businesses that supported over 51 million jobs nationwide, or 84 percent of the nation’s small business payroll.
The Brookings Institution researched the PPP in their article “Did the Paycheck Protection Program Hit the Target?”
“We find no evidence that funds flowed to areas that were more adversely affected by the economic effects of the pandemic, which we proxy using declines in hours worked, business shutdowns, and coronavirus infections and deaths. If anything, we find evidence that funds flowed to areas less hard hit.”
Black businesses that needed the money most were less likely to receive it. The New York Fed discovered, “We examine county-level counts of PPP loans for a consistent comparison with COVID-19 case counts and Black owned business receipts. In the 30 counties we note as particularly vulnerable to the effects of Black business closures, most counties have seen about 15%-20% of their total businesses receive PPP loans.”
“However, there is significant variation across counties. Of note, among the top 30 counties (measured by Black business receipts) only 7% of firms in Bronx, NY; 11.3% of firms in Queens, NY; 11.6% of firms in Wayne County, MI; and 12.2% of firms in Prince George’s County, MD received PPP loans.”
Depending upon the government for aid did not help rescue Black businesses.
“The projections for Black businesses are dire. When White America gets a cold Black America gets the flu. As we look at the projection for the country’s economic landscape in 2021 it is incredibly dire. We may very well be in a depression by March,” Dr. Wilmer Leon, political scientist and commentator, told The Final Call.
“There’s been a lot of discussion about a slow recovery. That’s not happening for the average American and not for small Black businesses. The vaccine is getting out, but I don’t think we’re going to see any significant reversal in the numbers of cases until March or April. The impact of the virus is going to get worse before it gets better and there aren’t any real significant programs as we speak right now.”
He added, “There is nothing to give small businesses the sustainability they are going to need for the next nine or 10 months to survive. It’s just not there. The government refuses to provide a real stimulus package. What they just passed was a mitigation package not a stimulus package. Some have called it an economic hospice package.”
Dr. Leon affirms the history of Black businesses always finding a way out of no way and making it through very tough times.
“We are incredibly resilient. We can get through this but it’s going to be tough,” he said.