Black women entrepreneurs want more federal support to start and grow businesses

Originally published by The 19th

Black women think the federal government could do more to advance entrepreneurship opportunities, as many view launching and sustaining businesses as key to creating wealth, according to a survey from Goldman Sachs’ One Million Black Women investment initiative.

The survey, published Thursday, comes as the Biden administration is embarking on a weekend filled with engagements that highlight its work to improve Black Americans’ economic standing. The economy continues to rank as a main concern among Americans, according to Gallup, and only 38 percent of Black Americans believe the president’s policies have helped Black people, according to polling by The Washington Post and Ipsos. 

The Biden administration last month put out a news release, touting ways it says Black Americans have benefited from its policies. It said that Black household family wealth was up 60 percent and that more than 2.5 million jobs had been created for Black Americans. The statement also cited record low unemployment rates for Black Americans, investments in small businesses and the cancellation of $160 billion in student debt. 

Still, per Goldman Sachs’ survey, 63 percent of Black women think that the federal government could do more to advance entrepreneurship opportunities. 

“I think Black women are looking for the federal government to give them more resources to help them start businesses and grow their businesses, whether it’s capital, access to additional education programs, and from a process standpoint, making it easier to license your business or get the permits necessary to start a business,” said Jessica Taylor, the national director of One Million Black Women. 

A 2022 report from the Federal Reserve showed businesses owned by people of color had a harder time obtaining loans, lines of credit and cash advances from banks and other lenders than those owned by White people. The goal of One Million Black Women is to invest $10 billion and give $100 million toward advancing economic opportunities for at least 1 million Black women by 2030.

Small business owners can compete for federal contract dollars, where the federal government spends billions purchasing goods or services, but only 9.4 percent of that money went to minority-owned businesses and 4.9 percent of it went to women-owned businesses in fiscal 2020, according to the left-leaning think tank Third Way. Some reasons Third Way cites for minority and women-owned businesses’ struggle with attaining federal dollars are “preferences for established and experienced businesses” and “confusing requirements and difficulty obtaining information on contracts” among others.

The Biden administration has set a goal of increasing federal contracting dollars to small disadvantaged businesses — what the Small Business Administration (SBA) defines as a business where someone who has faced racial or ethnic prejudice owns a majority stake in the business — to 50 percent by 2025, a White House representative told The 19th. They said 28.4 percent of last fiscal year’s federal contracting dollars — amounting to $178.6 billion — went to small disadvantaged businesses.

The White House representative also said the SBA has more than doubled the amount of loans it has offered to Black-owned businesses since 2020. SBA reporting shows Black-owned businesses accounted for 8 percent of loan approvals in fiscal 2023, and majority women-owned businesses accounted for 21 percent of loan approvals.

The SBA loans can offer as much as $5 million in business financing from lenders, but the money is rarely available for an owner who is just starting out; lenders typically want businesses that have been operating for two years. CNBC reports that “eight out of 10 Black-owned businesses fail within the first 18 months.”

Alanna Nicholas, the founder of Capital Talent Development Group and a participant of Goldman Sachs’ One Million Black Women: Black In Business program, a business education program, acknowledges the benefits of loans, but says they can be inaccessible for some.

 “The loan programs are great, but to obtain them, the credibility that takes them two years, that’s not a reality if you’re really going to start a business and really try to sustain it,” she said. 

Nicholas estimates her startup costs were around $20,000 — most of which came from her personal savings and some familial support. She wants to see “more grant funding tied to measurable outcomes that we can produce.”

Still, the establishment of Black businesses has boomed over the years, with the Biden administration noting that it’s the fastest growing rate of Black-owned businesses in over 30 years, something it attributed to the president’s investments in small businesses. The Annual Business Survey from the Census Bureau estimated that there were 161,031 Black-owned businesses in 2021, up from 124,004 in 2017. 

The survey from One Million Black Women found that more Black women want to start businesses, but they need financial and educational resources. The national survey was conducted by David Binder Research, a Democratic-leaning firm, between April 4-15 through phone and text-to-web. The margin of error was 2 percent for all U.S. adults and 4 percent for Black women. The survey consisted of 1,200 U.S. adults and an oversample of 600 Black women, with minor statistical weights applied to the base sample and oversample. 

The survey found that 61 percent of Black women view entrepreneurship as an important pathway to wealth creation. Seventy-seven percent of Black women in the survey said they would be more likely to start a business if they had more access to business loans, grants, lines of credit or seed funding.

Sixty-three percent of Black women believe the federal government could do more to advance entrepreneurship opportunities — with only 35 percent of Black women business owners believing their business interests are represented at the federal level. Further, 32 percent of Black women intending to vote in this year’s election remain undecided about the candidate who will get their vote. 

Nicholas said: “I’m eager to hear more from candidates about the issues that impact Black female entrepreneurs like me. We want leaders in Washington to appreciate how important entrepreneurship is for our community and as an opportunity for wealth creation for our families.”

The president is looking to highlight what the administration has done for Black Americans through a few key events this weekend. Friday marks the 70th anniversary of Brown v. Board of Education, the landmark case that ruled school segregation unconstitutional, and plaintiffs of the case and their families will meet with President Joe Biden at the White House on Thursday. Additionally, the president is slated to deliver remarks on Friday at the NAACP’s anniversary celebration of the case at the National Museum of African American History and Culture. He’ll end by giving the commencement speech at Morehouse College, a historically Black men’s college in Atlanta.