March 2, 2023
Survey: 47% Of Black Business Owners Project Gaining Financing Key To Their Success
The hurdle of obtaining financing to help start or grow businesses remains a lingering problem for many establishments, particularly small Black-owned businesses.
And the challenges have been intensified in recent years by headwinds such as high inflation and COVID-19 that forced many Black businesses to close, create new strategies to rebound from the pandemic, and consider other approaches to help ensure their growth, longevity and survival.
The adversity comes as the technology firm Hello Alice just lately released its 2023 Black Business Owners Insight Report sponsored by Mastercard and the National Association for the Advancement of Colored People (NAACP). Some 3,176 Black small business owners were surveyed by Hello Allice to honor
Black History Month and identify their characteristics and challenges heading into this year.
It was reported Hello Alice is a small business platform helping over one million SMBs across the U.S. achieve equitable access to capital. Its fresh report focuses on the challenges experienced by Black business owners, uncovers the gaps of services, and celebrates the momentum of this demographic. It touched on the needs and challenges of Black small business owners and found they are specifically venerable to macroeconomic conditions in 2023 as the year moves forward.
The good news is Black owners “are overall more optimistic about their futures and voiced uncommon perseverance as they pursue innovative ideas and solutions.”
Some of the findings revealed 47% of Black small business owners predicted that the success of their business will be conditional on their ability to secure funding, as well as grow their customer base.
Another discovery is Black business owners are much younger than other demographics with roughly 66% of black business below age 40. The report surmised that indicates “a new generation of black business owners and a steady growth of business creation”
So, why is it critical for Black business owners to secure financing given the uneven economy in recent months, particularly for younger Black entrepreneurs trying to grow or expand businesses?
Kelsey Ruger, chief product & technology officer at Hello Alice told BLACK ENTERPRISE via email securing financing now is crucial for Black business owners because it enables them to be prepared for unexpected challenges and opportunities. Some 80% of owners are considering applying for financing this year.
“An operating capital surplus can help them weather unexpected downturns in the economy and continue to take advantage of opportunities that might otherwise be missed. This is particularly important for young Black entrepreneurs who are trying to grow their businesses, as they need access to funding to invest in new products, expand their customer base, or hire additional employees.”
Ruger says there are several challenges that Black entrepreneurs face, but two important ones are the difficulty in accessing capital and the lack of representation and support in business networks. “These challenges can significantly hinder their ability to accelerate the growth of their businesses, which is a crucial driver for success.”
He pointed out 40% of Black entrepreneurs and owners surveyed noted raising capital as their greatest challenge. “They often receive less financing, less often, and at higher rates than non-Black entrepreneurs. A lack of access to capital makes it harder for them to start and grow their businesses, as they have fewer resources to invest in their ventures. However, securing financing is critical for accelerating the growth of their businesses, whether it’s to expand their operations, hire more employees, or invest in new equipment or technology.”
He added a lack of representation and support in business networks makes it harder for Black entrepreneurs “to build relationships with mentors, investors, and other key industry players, which can sometimes be the hidden key they need to take the next step.”
Check out some tips to help Black business owners with financing and other resources here.