A report from the National Bureau of Economic Research says 40% of black owned business will go bankrupt during this pandemic.
This is compared to just 17-percent of white owned businesses.
440-thousand black owned businesses have went under between February and mid-April.
UNO Professor Emeritus Janet Speyrer she says many black owned companies are true small businesses with small profit margins and slim reserves,
“Whites tend to have greater financial resources and they have access to small business loans. So comparing like-to-like small business loans for black owned businesses are harder to get and less likely to occur.”
Speyrer says since many black businesses are sole proprietors, filing 1099 self-employed, they are mostly being shut out of lifeline loans like the Paycheck Protection Program.
It’s not a very good picture for black owned businesses to survive the coming months of the coronavirus pandemic.
“A great example is the catering business. There were so many events that were cancelled, that a small catering business that can never recoup those dollars, you can never get back that revenue.”
Since many black owned businesses are sole proprietorships, like catering and wedding planning, they've been driven into bankruptcy after losing countless amounts of jobs due to cancellations as the pandemic took hold.
Black business is caught in a stranglehold of lack of savings, inability to get rescue loans, thin profit margins and other factors that have dealt a black business a body blow.
Speyrer says black business loss has a rippling effect on the community:
“A hard story both for businesses and the employees. And in particular with 41-percent compared to 17-percent, with black owned businesses going under, the African American employees will be unevenly impacted.
Commenting on the findings of the National Bureau of Economic Research report, Association for Enterprise Opportunity President and CEO Connie Evans told MSNBC,
“If we allow Black-owned businesses to fail, we all fail.”