More minority-owned businesses fear permanent closure, struggling to secure loans
Belief that minority small businesses face greater challenges sees sharp increase
WASHINGTON, D.C. — Minority-owned small businesses have been hit disproportionately hard due to the pandemic and corresponding economic crisis, according to a new special report released today by the U.S. Chamber of Commerce and MetLife. Minority-owned business owners are more likely than non-minority owners to report difficulty obtaining loans, express fears about permanently closing, and predict declining revenues in the coming year.
The poll finds that two in three (66%) minority small businesses are concerned about having to permanently close their business versus 57% for non-minority small businesses. However, the gap has narrowed significantly from May, when 52% of non-minority-owned businesses said they were concerned about closing versus a staggering 78% for minority-owned businesses.
"The pandemic’s disproportionate impact on minority-owned small businesses is further evidence of systemic inequalities in our country. Even more concerning, the pandemic could exacerbate and elongate the economic struggles already facing minority-owned businesses and families," said Suzanne P. Clark, president of the U.S. Chamber. "The Chamber’s work to expand equality of opportunity for all Americans through education, employment, entrepreneurship, and criminal justice reform will be crucial to helping minority-owned businesses recover from the crisis, rebuild their lives, and reach their full potential far into the future."
Additionally, in the wake of protests around racial injustice, there has been a 17-point increase from the beginning of 2020 [1] in the number of small businesses believing minority-owned small businesses face more challenges than non-minority-owned ones, from 52% in January to 69% in July. There was an even more significant jump among non-minority-owned small businesses, where in Q1 47% agreed and 40% disagreed; now, 67% agree and just 24% disagree.
Furthermore, two-thirds (66%) of all small businesses acknowledge that minority-owned businesses have been disproportionately impacted by COVID-19.
Additional findings include:
- Minority-owned businesses are more likely to have tried and failed in securing a loan.Minority-owned businesses are slightly more likely to report trying and failing to secure a loan to help survive the economic turmoil (13% versus 8% of non-minority businesses). Viewed as a percentage of those who have applied for a loan, 35% of minority-owned businesses came up empty, compared to 30% of non-minority businesses. Notably, more minority businesses seem to need capital with 19% planning on applying for a loan versus 6% of non-minority businesses.
- More minority-owned businesses expect revenue to decrease.The number of minority-owned businesses expecting revenue to decrease in the next year has shot up fivefold since the beginning of the year (5% in Q1 to 24% now) compared to a much smaller two and a half times uptick for non-minority-owned businesses (7% in Q1 to 17% now).
- Gaps exist in views around reopening.Minority-owned businesses are more concerned about the risks COVID-19 poses to their customers and employees (70% versus 58% of non-minority-owned small businesses). Minority business owners are also slightly more concerned around the lack of guidance on reopening (62% versus 54% of non-minority businesses).
- Minority businesses report more competition.44% of minority-owned businesses say the level of competition they’re facing has increased compared to six months ago (before the pandemic began), versus 27% of non-minority-owned businesses who feel the same way. That gap has increased from a 7-point difference in Q1 to a current 17-point difference.
- Majority of small businesses believe it is important to take steps toward racial equality.The two actions seen as particularly critical are making a commitment to fairness in hiring, promotion, and pay (79% view this as important), and supporting local, Black-owned businesses (74%).
- Small businesses report taking some form of action to address or promote racial equality this year.35% have issued a statement of support for racial equality and fairness, 28% have found ways to support local, Black-owned businesses, and 18% report reevaluating their hiring, promotion, and compensation practices.
“Our survey confirmed the significant challenges that minority-owned businesses are facing due to the pandemic,” said Jessica Moser, senior vice president, Small and Specialty Business at MetLife. “It also showed that most small businesses think it’s important to act by committing to fairness in hiring, promotion, and pay, as well as supporting local Black-owned businesses. These are practical, high-impact steps that can help minority-owned businesses as they weather the pandemic and look to build their futures.”
The Special Report on Race and Inequality on Main Street is a report, with data surveyed during the latest monthly Small Business Coronavirus Impact poll and compiled from all U.S. Chamber + MetLife small business surveys throughout 2020, including the Q1 2020 MetLife & U.S. Chamber of Commerce Small Business Index. To read the full report, visit uschamber.com/sbminority.
[1] In Q1 2020, the survey was conducted via phone, instead of the current online approach. While significant changes over time can largely be attributed to recent events and shifting views regarding racial equality, the methodological change may have also generated a slight mode effect.
About the U.S. Chamber of Commerce
The U.S. Chamber of Commerce is the world’s largest business organization representing companies of all sizes across every sector of the economy. Our members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations. They all share one thing: They count on the U.S. Chamber to be their voice in Washington, across the country, and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.
