The recently released 2024 State of Black Business report, sheds light on the ongoing challenges faced by Black entrepreneurs in America.
Produced by the Alliance for Entrepreneurial Equity, a partnership of the National Urban League and Third Way, the report underscores the persistent obstacles that hinder the growth and success of Black-owned businesses.
Despite some growth in recent years, Black entrepreneurs continue to encounter systemic barriers in accessing capital, markets, and resources. While the number of Black-owned businesses with at least two employees increased by 30% between 2018 and 2021, Black businesses still represent only 2.5% of all businesses in the nation, despite Black Americans making up more than 14% of the population.
One of the key findings of the report is the disparity in access to capital. Black-owned businesses are more likely to be smaller and newer than their counterparts, with only about 3% having more than 20 employees and nearly half being less than two years old.
Access to financing remains a significant challenge, with 40% of Black-owned businesses being completely denied loans, lines of credit, and cash advances, compared to only 18% of white-owned businesses.
Even when Black-owned businesses are able to obtain financing, they often face higher interest rates, leading to increased debt payments and difficulties in expanding their operations.
Disparities in venture capital funding are also stark, with only 0.5% of VC funding going to Black business founders in 2023.
Following a slight uptick in VC funding allocated to Black-owned businesses in the aftermath of the 2020 racial justice uprising, the subsequent three years have witnessed a consistent decrease.
The 2024 State of Black Business report highlights the urgent need to address these disparities and foster a more equitable ecosystem for Black entrepreneurs. The Alliance for Entrepreneurial Equity is working on a national policy platform to support Black and minority entrepreneurship, including initiatives to expand access to new markets, increase technical assistance, and streamline licensing processes.
“If Black-owned businesses were proportionate to population, the United States would see 7 million more jobs and $733 billion more in sales and revenue. We can’t allow fear and resentment to stand in the way of equal opportunity and economic prosperity,” Imani Augustus and Madeline Burke from the Alliance emphasized.
In the face of coordinated efforts to preserve systemic inequality, it is imperative to uphold the promises of racial justice and ensure equal opportunity for all.
By addressing the systemic barriers that hinder the success of Black-owned businesses, which is the purpose of this report, we can work towards a truly more prosperous economy for everyone.
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