Startups have taken off during the pandemic with majority Black areas playing a huge role in their success. A new report from Third Way found that in counties where over 75% of residents are Black, applications for new businesses increased 198%. The U.S. Census Bureau’s Business Formation Statistics data reveals the pandemic-era startup surge may have been more pronounced for minority entrepreneurs as the labor tide continues to shift.
The Breakdown You Need To Know:
During the early months of the pandemic, Black-owned small businesses closed at twice the rate of other commerce shops, 58% of them were at risk of financial distress, with 41% shutting down. CultureBanx reported that when the Biden administration sanctioned Fiscal Recovery Funds, African Americans received fewer business grants than their white-counterparts, and were five times more likely not to be a recipient of the Paycheck Protection Program (PPP).
Fast forward to 2022 where a surge of consumers are rallying to support Black businesses and just over 1.2 million African Americans making the decision to be self-employed.
Entrepreneurship growth is no longer being concentrated in traditionally dynamic hubs such as Silicon ValleyIn 2021, majority Black counties saw overall business applications increase by a whopping 103% from 2019 levels. Majority Hispanic counties saw a 58% increase, for majority white counties +52%, and majority Native American counties +41%, according to the Third Way analysis.
Not to mention that the number of new business applications in majority Black counties in 2021 was almost 3.5 times higher than the number of new applications seen in those same counties in 2005.
It’s plausible that economic necessity likely played a critical part in the growth in minority entrepreneurship. Researchers from the Kauffman Foundation found that 30% of new entrepreneurs in 2020 were unemployed when they started their business, which was double the pre-pandemic rate. In April 2020, the white unemployment peaked at 14.1%; that same month the Hispanic unemployment rate was 18.8% and the Black unemployment rate 16.6%. Now the unemployment rate as of September 2022 stands for white, Black and Hispanics stands at 3.1%, 5.8% and 3.8% respectively.