Solving Racial Inequalities in Small Businesses
Historically, minority entrepreneurs have faced greater challenges in launching, operating and growing small businesses compared to their white counterparts. Even entrepreneurs with decades of profitability face the indignity — and the financial harm — of being unable to borrow money from banks or other financial institutions. Tanieka Randall, a Houston-based entrepreneur of Tee’s Hair Secret, shared her experience with attempting to get financial assistance: “Our demand was really high, but it was taking forever for us to get paid. I started looking into other options, like loans, and I was eligible for nothing.” She added that her application for Paycheck Protection Program assistance was inexplicably denied.
The Biden administration has pledged to tackle these systemic inequities with programs in the Build Back Better initiative. The White House, under this initiative, has more than doubled the goal of federal contract dollars that are being channeled to small businesses of color, from 5% to 11%, and asked individual agencies to design and implement processes and protocols to achieve the growth goals.
Advocates say supporting entrepreneurs of color isn’t simply a matter of “doing the right thing” or addressing a social issue — it’s good capitalism, especially when it comes to fostering economic equity among marginalized groups of Americans. Businesses owned by people of color are more likely to be located in communities of color and to provide accessible jobs to the community. If these businesses fail, the ripple effects are especially acute for these communities.