In June, BRAC made a commitment to address racial disparities and focus on economic inclusion in the Capital Region, which included a pledge to focus on issues facing Black-owned businesses in Baton Rouge. As part of this focus, BRAC surveyed Black-owned businesses in the metro area to determine how they have been impacted by the pandemic. This survey, designed to reflect questions in a US Census national survey that included businesses owned by those of all demographic backgrounds, was then benchmarked against the national data. The results of the effort indicate that Black-owned businesses in the Capital Region have faced hardships that the average US business has not, and that many are facing an existential crisis unless the economy soon recovers, or other assistance is found.
Overall, 59% of local Black-owned businesses have experienced a large negative effect from COVID, compared to just 38% nationally – a 55% greater impact on Black-owned businesses. In fact, while 13% of businesses nationally felt no effect at all, the same is true of only 2% of the Black-owned businesses here. Digging into specifics, Black-owned businesses in the Capital Region have experienced much greater supply chain disruption than the average business nationally. While 58% of the local Black-owned businesses surveyed experienced supply chain disruption, only 32% of businesses did nationally.
The issue also effects local employment – 41% of Baton Rouge Black-owned businesses decreased employment within the last week before the survey, while that number was just 12% nationally. The most troubling finding from BRAC’s survey and analysis concerns cash on hand, which is critical for survival of the economic upheaval caused by the pandemic. While 27% of national respondents said they could survive three months or more with the amount of cash they have on hand – and 57% say they could survive a month or more – Black-owned businesses in the Capital Region fare much worse, reporting those numbers at just 4% and 25%, respectively.
Looking forward, these local businesses are facing very tough challenges, but the data shows that business owners have been willing to change and adapt, with 24% having shifted to production of other goods and services, compared to only 5% nationally. Similarly, 19% of local Black-owned businesses have shifted to pickup/carry-out/delivery models due to the pandemic, while only 7% of national firms have done so. Black-owned businesses are seeking financial assistance via federal funds made available to small businesses – 55% received Paycheck Protection Program (PPP) funds, and 65% utilized some form of the Small Business Administration’s Economic Injury Disaster Loan program. However, the United States Inspector General issued a report in May showing that disadvantaged businesses and businesses in rural areas were less likely to access the PPP. While there is no projection as to what percentage of Capital Region businesses received a PPP loan, it is likely that national statistic is true here in the Baton Rouge Area as well.
Black-owned businesses locally have experienced a larger negative effect than national businesses, and the expected decrease in consumer spending from the expiration of federal unemployment enhancement may further exacerbate issues involving revenue. While almost all businesses have felt the economic pain inflicted by this pandemic, it appears that Black-owned business have been particularly impacted. This compounds the disparities that already exist in the region, including higher levels of poverty, lower household income, and fewer educational and management opportunities for people of color. The data underscores the important conversations going on in the community about inclusivity and equity, and policies that underscore and address those principles.
Policymakers and business associations looking to support Black business ownership, growth, and health should seek ways to address the findings from the survey. Some key actions include: 1) ensuring Black-owned businesses apply for grants or low-interest loans available from the state or federal government to help weather this storm, including Louisiana’s Main Street Recovery Grant Program & Resilient Restart EBR micro-grant program; 2) design intentional outreach to help Black-owned firms receive recovery information in times of crisis (I.e.: if a new round of PPP is approved by Congress this fall, state leaders should promote it in a targeted way to Black-owned businesses); and, 3) as part of the state’s recovery efforts, increasing the reach of high-quality small business development organizations is critical. Such organizations need additional financial and programmatic support and should target their work to helping Black-owned businesses that are struggling to have better resilience plans to make it through the pandemic.
Andrew Fitzgerald
As Senior Vice President of Business Intelligence, Andrew focuses on research and analysis for BRAC’s business development and economic competitiveness teams, providing economic, demographic, and fiscal research to support business expansion and relocation efforts in the Baton Rouge Area and analysis of education, workforce, tax, and other economic and public policy issues.