Together, We Are Stronger

It’s good business to holistically address challenges faced by minority-owned businesses

BY AYANNA KHAN

AS OUR ECONOMY continues to reopen, recover, and rebound, we’ve learned many things from the events over the past two years—from a health crisis to civil unrest, to social injustice and racial inequity. Our experiences have shined a bright light on unique challenges as well as extraordinary opportunities facing Delaware’s minority-owned businesses.

When reflecting on 2021, several issues are evident. Minority entrepreneurs often face systemic racism, difficulty in securing funding, and a lack of social capital on which to draw. However, there is hope in the form of support and resources at that are becoming available for the minority business sector here in Delaware.

Programs to increase access to capital for underserved populations as well as business training support and mentorship are desperately needed. When more resources are offered, the number of successful small businesses will increase, and ethnic income gaps will reduce.

Minority business owners traditionally have less access to much-needed business and management skills that are important to running a company. In addition, people of color tend to lack access to capital and collateral and have lower credit scores. This can lead to higher interest rates or to more frequent loan denials. While people of color start businesses at the same rate as white entrepreneurs, there is a vast disparity in profitability, size, and early survival rates.

One area of disparity that is most significant for minority entrepreneurs is the gap in business financing. According to one study, minority-owned businesses grew by 79 percent over the last 10 years. That represents a significant increase compared to overall small-business growth for the same period. However, the strength in numbers does not translate to financing.

While many small businesses have been able to access federal relief to aid from the impact of the pandemic, some small business owners struggled to navigate funding programs. According to one report on Paycheck Protection Program activity released by the Small Business Administration, only eight percent of loans went to African American business owners.

Regular business loans for minority-owned businesses are typically smaller than for white-owned companies. For non-minority businesses with more than $500,000 in annual gross revenue, the average loan amount is $310,000. For minority-owned businesses, it’s $149,000. These lending disparities are driven by lower net worth, lack of collateral, poor or no credit, and lack of business planning and resources.

Lack of access to monetary capital is just one barrier facing minority business owners. Another is a lack of social capital. Having powerful networks of advisors, peers, colleagues, and other business owners is essential for entrepreneurs wanting to market, seek advice, and lean on others.

To combat this, the Delaware Black Chamber of Commerce was launched to provide peer support ecosystems, networking opportunities, educational programming, and other resources to foster deeper connections between Delaware minority and non-minority business owners.

Unless opportunities and a level playing field are shared across all business owners, we will not have sustainable strong, ongoing economic growth.

Unless opportunities and a level playing field are shared across all business owners, we will not have sustainable strong, ongoing economic growth. Together, we must work collaboratively to ensure equity by challenging the status quo. We need to unite our voices and interests to develop and support policy for sound business strategy and practices that will ensure a sustainable, healthy economy for an increasingly diverse statewide marketplace. Business diversity, is quite simply good business.

The Delaware business sector and the broader economy works best when prosperity is widely shared, especially among historically marginalized populations or those who have faced barriers to opportunity. An inclusive economy is representative of all interests in society—major and minority population groups, women and men, every generation and ethnicity. Fostering an inclusive economy requires a holistic approach that includes government, the private sector, and communities. We are the bridge to an equitable, sustainable economy.

The entire economy will reap the rewards of increased innovation, healthy competition, improved products and services, and a thriving marketplace when all sector participants are seated equally at the table. Together, we are stronger. We have a unique opportunity now to ensure that Delaware’s economy works for all.

Ayanna Khan is founder, president and CEO of the Delaware Black Chamber of Commerce.