Over the past ten years, minority and women owned businesses (MWBEs) have made significant strides creating thousands of jobs and fueling the economy. According to a 2019 report from American Express as of last year women-owned businesses represented 42% of all businesses — nearly 13 million — employing 9.4 million workers and generating revenue of $1.9 trillion. The U.S. Senate Committee on Small Business and Entrepreneurship reports that in the past decade minority businesses accounted for more than one million new businesses started in the United States creating 4.7 million jobs.
Then the COVID-19 pandemic hit threatening to wipe out nearly all of this growth. Research from the Brookings Institute found that “the COVID-19 recession has the potential to be disproportionately devastating to MWBEs. Whereas the Great Recession hit manufacturing and construction hard, COVID-19 is putting the food services, retail, and accommodation industries at immediate risk.”
The American Express report also found that approximately 22% of all women-owned businesses are in the service category such hair and nail salons and pet care businesses, which are among the hardest hit by the stay-at-home orders. A survey conducted online in late March by the Stanford Latino Entrepreneurship Initiative also found that nearly two-thirds of Latino small-business owners said they will not be able to continue operating beyond six months if current conditions continue.
Despite these grim statistics, I believe MWBEs can survive, thrive and drive our return to economy prosperity. To start with, here are three way to support them:
First, SBA loans must be accessible to MWBEs. In the next round of federal stimulus funding the Small Business Administration needs to follow the intent of the law and ensure that MWBEs receive a fair share of loans. A recent report released from the Small Business Administration’s inspector general found that the SBA needs to “issue guidance requiring lenders to prioritize borrowers in underserved markets and revise the borrower application to include collection of optional demographic information for the principals for the remaining available lending authority shutout and any future lending under the program.” This is absolutely critical to ensuring equity in lending and that minority and women owned business have access to funding needed to keep them afloat.
Second, small businesses need to look ahead and seek expert advice as they re-think and re-invent their capabilities and approach to survive in the near-term and thrive in the long-term. Companies need to anticipate customer opportunities that will emerge as restrictions lift and commerce begins to flow. For example, companies may prefer Zoom, Slack, and Microsoft’s Teams over face-to-face interactions to conduct business. Entrepreneurs and business executives who work in industries or at businesses with successful e-commerce or digital business models should “pay it forward” and help struggling entrepreneurs evolve in this “new normal.” One of the best ways to do this is to get involved with SCORE, one of the Small Business Administration’s partners, which has helped more than 11 million entrepreneurs through free mentoring, workshops and educational resources since 1964. Now more than ever, SCORE needs volunteer mentors who can give small businesses advice, encouragement and a sense of hope.
Lastly, there needs to be more public-private partnerships like the one in the Sacramento region that quickly raised over $1.2 million for the Donate4Sacramento COVID-19 fund to help families, individuals and businesses in this time of crisis. Importantly, a key part of this effort involves the Small Business Fund which is distributing $1,000 grants to selected small businesses that are at least 51% minority-owned.
If we collectively support minority and women owned businesses, the faster and more successful our overall economic recovery will be. The Brookings Institute found that “although MWBEs were more likely to shutter during the Great Recession, they helped stabilize the economy during the recovery period. Nationally, MWBEs added 1.8 million jobs from 2007 to 2012, while firms owned by white males lost 800,000 jobs, and firms equally owned by white men and women lost another 1.6 million jobs.”
Political, business and community leaders need to ensure that minority and women owned businesses have the tools needed to stay afloat now and thrive in the years to come. We cannot afford to wait; they are the backbone of our economy and will drive our collective ability to successfully rebound from this crisis.
Bernice Ledbetter is Dean of Students and Alumni Affairs and Director of the Center for Women in Leadership at the Pepperdine Graziadio Business School