Report Shows Black Businesses Close At Higher Rate Amid COVID-19
COVID-19 Entrepreneurship

Reports: Black-Owned Businesses Still Close At Double The Rate Of White Businesses

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The spread of COVID-19, or the novel coronavirus, pandemic has been detrimental to small businesses around the country. Black-owned small businesses have taken the hardest hit due to longstanding racial disparities and lack of resources. Now new studies are showing that Black-owned businesses are shutting down at higher rates than their white counterparts.

Overall, small businesses have taken a huge hit. A National Bureau of Economic Research (NBER) study showed that number of businesses were cut by 2.2 million between February and May, a 15% loss. According to a report by The Washington Post, 26% of Black business owners have closed their businesses between February and May 2020. By comparison, only 11% of white business owners have closed shop.

One reason behind this trend is many businesses owned by Blacks and immigrants are rooted in industries that are deemed “non-essential,” which forced storefronts to close for a few months during quarantine. In fact, 66% of Black entrepreneurs run businesses in essential industries compared to the national average of 76%.

“The negative early-stage impacts on minority- and immigrant-owned businesses, if prolonged, may be problematic for broader racial inequality because of the importance of minority businesses for local job creation, economic advancement, and longer-term wealth inequality,” said economist Robert Fairlie of the University of California at Santa Cruz, in an interview with Bloomberg. The study also found that in April 41% of Black business owners shut their doors either permanently or temporarily. Despite the states going forward in their reopening process, Black businesses are still suffering at staggering rates.

“If a more complete rebound does not happen soon, the long-term economic consequences could be severe,” Fairlie told The Washington Post. “Many minority business owners will not have the resources to weather prolonged closures, reduced demand from health concerns, and a more comprehensive recession.”


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