Covid has undoubtedly been extremely difficult for many small businesses, and countries have initiated unprecedented financial support to try and help them weather the restrictions that have forced them to either shut entirely or offer limited service for prolonged periods.
As research from UC Berkeley demonstrates, however, this support was often too homogenous to support minority-owned businesses effectively. The authors argue that more race-conscious policies that provided rent relief, improved employee benefits, and a data collection mandate for financial institutions, could have been more effective at reducing the economic impact of the pandemic on minority-owned businesses.
Systemic inequalities
The report, which was produced by the Urban Displacement Project at Berkeley, found that historic and systemic inequalities have hampered the ability of minority-owned businesses to access the financial support available from the government, as well as paying overdue rents or providing sufficient benefits to their employees.
The authors assessed all nine counties of the Bay Area region and found that 29% of all businesses are owned by people of color. These businesses are overwhelmingly concentrated in sectors such as administration, transport, accommodation, and personal services.
Access to government support was lower among Black and Latinx-owned businesses than it was for Asian-owned businesses, which meant that many businesses were frozen out of state support at a time when they desperately needed it.
What’s more, there is no real comprehensive dataset to enable policymakers to understand businesses owned by people of color, which has obvious implications for the effectiveness of any policies produced.
“Often when we develop programs to provide businesses with capital and resources, only the best-connected firms benefit. We saw this happen again with the PPP loans during the pandemic,” the researchers conclude. “So, in order to direct aid to the most deprived businesses, we have to know where they are, so we can reach out to make sure businesses get the loans they need to survive.”
