Why Black and Hispanic small-business owners have been so badly hit in the pandemic recession

why black and hispanic small business owners have been so badly hit in the pandemic recession

The pandemic has taken a heavy toll on Main Street, with small businesses across the U.S. closing by the thousands.

But as bad as the overall scene is, for minority-owned businesses the picture is even bleaker. A survey released on Jan. 27 by advocacy group Small Business Majority found that almost 1 in 5 Black and Hispanic entrepreneurs expected to permanently close their business over the course of the next three months – a rate higher than for white business owners. It comes on the back of a report by the Federal Reserve of Cleveland that suggested that the impact of the coronavirus could be over two times larger for Black- and Hispanic-owned businesses than for white-owned enterprises.

As scholars who research racial inequities and entrepreneurship, we know that even before the pandemic, Black- and Hispanic-owned businesses were more vulnerable to economic downturns. Minority-owned businesses tend to have lower levels of capital – the amount of equity relative to debt – than white-owned businesses, making it harder for them to safeguard against unexpected economic downturns. In addition, Black- and Hispanic-owned businesses tend to concentrate in areas and industries that have been especially heavily affected by the pandemic, such as retail and the restaurant business…

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