Women and minority-owned small businesses aren’t sharing in the U.S. recovery
The report, which surveyed more than 35,000 small business owners across 27 countries and territories in February, found that in the U.S. 22% had closed their businesses, up from 14% in October. That’s just a one point improvement from May 2020, in the middle of widespread lockdown, when 23% of businesses were shuttered.
But the problem is especially bad for minority-owned businesses where 27% were closed compared to 18% of other small businesses. In the group of minority-owned businesses, Black-owned businesses were the most likely to be closed by a large margin.
A major cause of this disparity is that Black-owned businesses have access to less capital in general and even more so during the pandemic, said Vickie Gibbs, executive director of the Entrepreneurship Center at UNC-Chapel Hill’s Kenan-Flagler Business School. Many of the government-funded PPP loans were funneled through large banks that required a lot of paperwork, so small Black-owned businesses without a dedicated accountant or an account with a big bank struggled to get the funds they needed to stay afloat, Gibbs told Fortune.
“A lot of people just didn’t get access to those funds,” said Gibbs.
More than half of minority-led businesses saw a drop in sales compared to previous years, slightly higher than other small businesses surveyed in the U.S. Nearly a third of minority-owned businesses reported layoffs, compared to a fourth of other small businesses.
Businesses in hospitality and retail, where minorities make up a large portion of owners and employees, were the hardest hit by closures, sales declines, and workforce reductions, according to the report. Almost half of the businesses that didn’t close said they had laid off half or more of their employees.
Women-owned businesses were also more likely to be closed than businesses led by men and more likely to report a loss in sales by a gap of seven percentage points.
Businesses led by women tend to be particularly susceptible to pressures brought on by COVID-19 because, along with their businesses, women also tend to have family obligations to attend to, Gibbs told Fortune.
“When we had all of the kids at home, being home-schooled, having daycare closed or parents not feeling safe to take their kids to daycare, women were stretched thin.”
Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.