The economic devastation of COVID-19 has been especially concentrated in communities of color. That fact is even clearer now with the release of a new report that suggests nearly half of all Black-owned small businesses across the country have had to close their doors in recent months.
Listen by clicking the audio player above: The COVID-19 pandemic’s impact on Black-owned small businesses.
Claire Kramer Mills is the Assistant Vice President and Director of Community Development Analysis, Outreach and Education at the Federal Reserve Bank of New York. She says many small businesses were already cash-strapped prior to the pandemic and dependent on consistent cash flow from customers. This fact is especially true for Black-owned small businesses forced to shutter amid the COVID-19 pandemic.
“We’re really talking about mom-and-pop organizations on the whole,” says Mills on a new report showing 41% of Black-owned small businesses closed due to the health crisis.
According to Mills, the disparity in economic impact for white and Black small businesses is in large part due to existing discrepancy in banking.
“There were real disparities when it comes to pre-existing banking relationships…there were real big differences between white- and Black-owned businesses having previous banking relationships,” says Mills. Looking forward, Mills says consumer behavior and the potential for federal aid are both uncertain. She says as the pandemic continues on longer than previously predicted, more will have to be done for small businesses.
“This is not a one and done situation,” says Mills on the allocation of federal aid to small firms.