COVID-19 Impact Survey Report

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COMBATING COVID-19

IMPACT ON MASSACHUSETTS BLACK-OWNED BUSINESSES PREPARED BY BECMA


© 2020 BLACK ECONOMIC COUNCIL OF MASSACHUSETTS, INC. STAFF OF BECMA COMPILED THIS DOCUMENT FOR THE BENEFIT OF THE PUBLIC PUBLISHED: MARCH 19, 2020 BLACK ECONOMIC COUNCIL OF MASSACHUSETTS, INC. ONE BEACON STREET, SUITE 1500 BOSTON, MA 02108 (857) 308-4623 WWW.BECMA.ORG FOR MORE INFORMATION ABOUT THIS DOCUMENT, PLEASE CONTACT US AT INFO@BECMA.ORG


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EXECUTIVE SUMMARY BACKGROUND METHODOLOGY QUANTITATIVE FINDINGS TRENDS & STORIES 2020-2021 BOARD OF DIRECTORS EXISTING RESOURCES


EXECUTIVE SUMMARY From March 13, 2020 to March 17, 2020, the Black Economic Council of Massachusetts (BECMA) conducted a survey of its membership to determine a.) how the COVID-19 pandemic was impacting their business, b.) how they were responding to the crisis, and c.) what they anticipate needing to do in order to survive until the end of the crisis. The responses from BECMA members revealed that Black-owned businesses based in the Commonwealth are already severely impacted by the COVID-19 pandemic. The overwhelming majority of respondents (90%) are experiencing a somewhat to severe negative financial impact as a result of the crisis. Many who rely on contract work have found those contracts postponed or cancelled, storefront businesses found little to no foot traffic (prior to Gov. Baker's ban on large gatherings), supply chains have been

disrupted, and worker capacity and productivity decreased as more employees sought to remain safe and self-quarantine in their homes. Black businesses were already in a precarious position prior to the start of the COVID-19 pandemic. The current crisis has devastated an already hampered business community. Without tailored efforts to protect them, the crisis could eliminate large portions of the Black business community. "My supply chain comes from China/Thailand and has been halted," said AK Ikwuakor, owner of Elete Styles, a premier clothing company based in Boston. "Plus, people are holding on to cash and not spending it on clothing. Operations got hit pretty hard in a matter of days." Nearly two-thirds of respondents (61%) reported that their business can survive between 1-3 months or not at all. 43% of members with full- and part-time employees said they are considering staff reductions in order to survive until the end of the crisis.

Combating COVID-19: Impact on Massachusetts Black-owned Businesses

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BACKGROUND

Founded in 2015, the Black Economic Council of Massachusetts (BECMA) advances the economic well-being of Black businesses, organizations that support the Black community, and Black residents of the Commonwealth of Massachusetts by advocating for economically progressive policies, convening stakeholders in solutions-based dialogues, and connecting its members to important opportunities and one another. As stated in the Executive Summary (p.1), we conducted a short survey of our 270+ members to determine the impact the COVID-19 pandemic has already had on their day-to-operations, and what impact the crisis is likely to have as it lasts. Responses will help BECMA and its partners determine areas of need as well as the different types of resources that must be made available in order to help members make it through to the other side.

METHODOLOGY

We alerted our members via email on Friday, March 13, 2020 about the availability of the survey. We also connected with members via social media platforms like Facebook, Twitter, and Instagram. Our survey was developed in partnership with the Massachusetts LGBT Chamber of Commerce. The survey was only directed at small business that are majority Blackowned, and only those in our membership. We did not include responses from any corporate or strategic partners, or those who fall outside of the purview of the mission of the organization. 36% of those who accessed the survey completed it. The small businesses represented in the survey range in location and are based in areas like Boston, Cambridge, Fitchburg, Quincy, and Worcester. 55% of the respondents have more than one full- and part-time employee, employing a total of 457 Massachusetts residents.

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QUANTITATIVE FINDINGS

Our survey generated several pieces of quantitative data regarding the degree to which COVID-19 was impacting a respondent’s business. The following are the questions we asked followed by a summary of responses. What financial impact do you anticipate this situation having on your business?

87%

Mild 10.5%

Severe 39.5%

Somewhat 21.1%

Significant 28.9%

What impact do you anticipate this situation having on your supply chain? None 15.8%

Severe 23.7%

Mild 23.7%

Significant 13.2%

Somewhat 23.7%

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QUANTITATIVE FINDINGS (CONT'D)

How long can your business survive with your current cashflow and/or reserves? 1+ year 13.2%

Not at all 13.2%

7-12 months 7.9%

87%

4-6 months 18.4% 1-3 months 47.4%

Which measures do you anticipate having to take to prepare for any economic slowdown?

Delay projects/hiring Cancel/postpone events Decrease expenses Cancel/delay contracts Reduce staff Reduce hours Reduce prices Other Increase prices 0

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TRENDS & STORIES Many Black-owned businesses occupy the food services, construction, and hair & personal care industries. Many more serve as independent contractors across various sectors and fields. This diversity is reflected in those who responded to our survey. These businesses are being impacted in a variety of ways. Some of the trends we've seen include: Contracts are being postponed or cancelled altogether Social distancing and government bans have wiped out foot traffic Federal travel restrictions have disrupted supply chains Worker capacity and productivity are limited due to transportation restrictions and lack of access to tech Events and meetings are being cancelled

"I was days away from going on a international speaking tour with Google. My supply chain comes from China / Thailand and has been halted. Plus people are holding on to cash and not spending it on clothing. Operations got hit pretty hard in a matter of days. I am in the process of creating online content to redirect efforts." ~ AK Ikwuakor, Owner, Elete Styles "The weekend following the [State of Emergency] our business only earned 37% of normal sales. With the latest mandate restricting on-premise consumption and the prohibition of alcohol sales, we’ve eliminated 90% of our revenue source. We were forced to lay-off 36 employees and switch to a takeout-only model. The limited operation mandate is tentatively scheduled to end April 6th, and in just three weeks time we are slated to lose revenues in excess of $200,000." ~ Nia Grace, Owner, Darryl's Corner Bar & Kitchen

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2020-2021 BOARD OF DIRECTORS Teri Williams Board Chair President, OneUnited Bank

Farah Belizaire Founder, LiteWork Events

Terryl Calloway Herby DuvernĂŠ President, Calloway Graphix CEO, Windwalker Group

Reggie Nunnally Glynn Lloyd Chiderah Okoye Dir., Bus. Equity Initiative President, Blue Hills NAACP Director, Venly Insititute

Carole Montgomery Board Treasurer Gravestar Inc.

Priscilla Flint-Banks President, BEJI

Lee Pelton Pres., Emerson College

Combating COVID-19: Impact on Massachusetts Black-owned Businesses

Beverley Johnson President, Bevco Assoc.

Darryl Settles Catalyst Ventures Dev.

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EXISTING RESOURCES U.S. SMALL BUSINESS ADMINISTRATION

MASS. GROWTH CAPITAL CORPORATION

The federal government, through the SBA, is making emergency capital available to small businesses and non-profits via the Economic Injury Disaster Loan Program. Massachusetts businesses are now eligible for this program.

Massachusetts, through the MGCC, is making $10 million in emergency capital available to small businesses and non-profits.

Loans offer up to $2 million in assistance. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for nonprofits is 2.75%. SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. www.sba.gov

A summary of the terms and conditions: Open to MA-based businesses under 50 fulland part-time employees, including nonprofits Negative impact must be verifiable Loan amounts up to $75,000 Loan amount not to exceed 3 months of demonstrated cash operating expenses for the 1st quarter of 2020 No payments due for first 6 months, then 30months of principal and interest payments Annual interest rate 3% Personal guarantee required of all owners with 20% or more interest in the company Personal credit score under 575 will require an exception All asset lien on businessNo prepayment penalty www.empoweringsmallbusiness.org

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BECMA One Beacon Street 15th Floor Boston, MA 02108

www.becma.org • info@becma.org • (857) 308-4623 •

/BECMAbos •

@BECMAinc


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