The impact of COVID-19, health care costs, and consumer spending are top challenges U.S. business owners—including Black entrepreneurs—face heading into 2021, a new Bank of America survey shows.
The Bank of America 2020 Small Business Owner Report included more than 300 interviews of Black business owners. It revealed that as entrepreneurs continue to navigate challenges on the road to recovery, they remain resilient, creative, and innovative, says Sharon Miller, Head of Small Business at Bank of America. The research also found many proprietors believe the small business environment will stabilize as consumer spending and confidence increases, and as public health improves.
The report found many business owners stayed open by implementing enhanced safety measures and by changing their primary revenue stream. “I’ve been inspired by business owners throughout the country who have demonstrated a commitment to innovation while serving the needs of their local communities,” says Miller. “Every day, I hear from entrepreneurs who are retooling and adapting to create new opportunities for themselves and their employees.”
Examples includes distilleries that retooled to make hand sanitizer or clothing designers that invested in the production of face masks. The research also show one-quarter of businesses that stayed open transitioned to a more digitally focused strategy, including shifting sales to e-commerce, or boutique fitness studios offering online classes when physical locations closed.
Further, access to capital continues to be critical for business owners to survive heading in 2021. “Black business owners have been disproportionally impacted by the coronavirus,” says Miller. “Our team at Bank of America is taking steps to directly engage with minority business owners to ensure they have access to the tools and resources they need to secure funding.”
She says small business bankers will continue to be there to support business owners as they navigate through the Paycheck Protection Program (PPP) loan forgiveness process. She added they can also discuss traditional loan product options to fit individual needs such as purchasing inventory, refinancing debt, or financing account receivables.
Last year, Bank of America provided more than 343,000 loans for about $26 billion during the overall PPP program, including a significant percentage to Black-owned black businesses, a spokesman told Black Enterprise. All told, the PPP program issued 5.2 million loans worth $525 billon. This year, Bank of America plans to take part in the re-opening of PPP.
Moreover, Bank of America’s Miller says bankers can help connect business owners who may not qualify for traditional bank financing to the bank’s network of community development financial institution (CDFI) partners across the country that are working to increase access to capital for business owners who have historically faced barriers.
Bank of America says it is the nation’s largest investor in CDFIs, with more than $1.6 billion in loans and investments to more than 250 CDFIs. The bank last June announced a $1 billion, four-year commitment to help local communities address economic and racial inequality accelerated by the global pandemic. In practice, the bank contends it will include philanthropy, sustainable finance through lending and investing, CDFI and MDI partnerships, development of financing solutions for small businesses, and other services.
The nation’s second largest bank also stated it recently committed $200 million from that pledge to direct equity investments in Black- and Hispanic/Latino-owned businesses to help supply growth capital as well as to invest substantially in programs to create future entrepreneurs.
More details from Bank of America’s latest small business owner report can be found here.