“Among businesses with good credit scores, Black-owned firms are half as likely as white-owned firms to receive all of the financing they apply for.”
February 28, 2022
Washington, DC—In recognition of Black History Month and in celebration of the 50th anniversary of the Congressional Black Caucus (CBC), the Joint Economic Committee (JEC) and the CBC released a new report on the state of Black entrepreneurship and policies that would eliminate barriers to Black business formation to promote stronger and more inclusive economic growth.
As the new report, titled “Building an Economy that Embraces and Empowers Black Entrepreneurship,” makes clear, Black entrepreneurs and small businesses are integral to the overall strength of the U.S. economy. Yet pervasive racial gaps in business ownership, opportunity and wealth restrain the economic potential of the United States.
Among the report’s key findings:
- There are more than 3 million Black-owned businesses who contribute over $200 billion to the American economy annually
- Black-owned businesses are among the fastest growing: Between 2012 and 2017, the number of Black-owned businesses grew at a faster pace than the number of white-owned businesses
- Black-owned businesses employ 1.27 million Americans, or roughly one percent of all actively employed workers, and generate $134 billion in annual sales and over $40 billion in payroll.
Despite the importance of Black-owned businesses to the U.S. economy, Black entrepreneurs continue to face long-standing barriers to financing, which limit entrepreneurship and business formation:
- Although Black Americans represent more than 13% of the population, only about 10% of all businesses in the United States are Black-owned.
- Black businesses are generally less likely to have their financing needs met than white-owned businesses: Among businesses with good credit scores, Black-owned firms are half as likely as white-owned firms to receive all of the financing they apply for.
- As a result of pre-existing inequality, Black businesses were much more vulnerable to the adverse effects of the pandemic, particularly as Black businessowners faced barriers to accessing emergency pandemic relief: Two-thirds of small employer firms owned by Black Americans reported having to reduce their operations due to the pandemic, relative to about half of white-owned businesses.
- Black businesses experienced the most acute decline since the very early stages of the pandemic: The total number of active business owners fell by 41% for Black business owners from February to April 2020, compared to 22% among all business owners
Policies that level the playing field for Black entrepreneurs and address barriers to financing are critical to addressing racial wealth inequality and promoting overall economic growth.
“Black-owned business are among the fastest growing in the country and serve as engines of job creation and drivers of overall economic growth,” said JEC Chairman Don Beyer. “As this report makes clear, barriers to Black business formation directly harm Black families and communities and limit the overall potential of the U.S. economy. These businesses are essential to building a stronger and more equitable economy that provides employment and wealth-building opportunities to families and workers across the country. I’m pleased to continue to partner with Chairwoman Beatty and the Congressional Black Caucus to shine new light on the ways policymakers can address long-standing disparities that hinder Black business formation in order to promote pathways to economic growth that is stronger, stable and more broadly shared.”
“Our nation’s economy works more effectively when everyone participates, and as our report illustrates, approximately 3 million Black-owned businesses contribute more than $200 billion to the U.S. economy annually, employing over 1.2 million Americans. In fact, between 2012 and 2017, the number of Black-owned businesses outpaced that of white-owned businesses. As Black entrepreneurs continue working towards gaining equitable access to the resources, investments, and other venture capital that supports small businesses, there must be more attention paid and effort made to combating barriers this community faces. When Black businesses succeed, America succeeds. I look forward to continuing to partner and collaborate with Joint Economic Committee Chairman, Don Beyer, as the CBC and the JEC work to provide insight, create legislation and policy, and endeavor to achieve a more equitable, accessible, and pro-growth American economy,” said Congressional Black Caucus Chairwoman Joyce Beatty.
The JEC and CBC recently released a new analysis of the impact of economic trends and barriers on Black Americans. State and national data spanning the last 50 years highlight significant areas of economic progress among Black Americans. However, the data also make clear the persistence of structural and economic barriers facing Black workers and families that result in disparities across broad socioeconomic indicators and outcomes.
The JEC recently held hearings examining the racial wealth gap and the gender pay gap, with a particular focus on the “double gap” faced by Black women, who experience the effects of both the gender and racial wage gap.
About Congressman Beyer
Congressman Don Beyer is currently serving his fourth term in the U.S. House of Representatives, representing Northern Virginia suburbs of the nation’s capital. In addition to his role as Chairman of the U.S. Congress Joint Economic Committee, Beyer serves on the House Committee on Ways and Means and the House Committee on Science, Space and Technology, where he chairs the Subcommittee on Space and Aeronautics. Previously, Beyer served as the Lieutenant Governor of Virginia and Ambassador to Switzerland, and built a successful family business over the course of four decades.
About the U.S. Congress Joint Economic Committee
The U.S. Congress Joint Economic Committee is Congress’s bicameral economic think tank. It was created when Congress passed the Employment Act of 1946. Under this Act, Congress established two advisory panels: the President’s Council of Economic Advisers (CEA) and the JEC. Their primary tasks are to review economic conditions and to recommend improvements in economic policy. Chairmanship of the JEC alternates between the Senate and House every Congress.
About the Congressional Black Caucus
The Congressional Black Caucus is committed to advancing Black families in the 21st Century through addressing the economic disparities that have plagued our communities for generations, creating opportunities that combat poverty, and closing the worsening racial wage and wealth gaps in America. The CBC supports policies that strengthen protections for workers and expand Black entrepreneurship, business development, partnerships and reports such as this one. The CBC will continue to champion economic justice for Black families throughout the nation, until true equity is achieved.