Here’s a sobering statistic: 41% of Black small business owners are more likely than the average of 32% of small business owners to seek out additional financing to address challenges facing their business.
The data is telling because minority entrepreneurs often do not apply for small business loans for fear of rejection or they will get lower amounts and higher interest rates if approved.
The latest discovery was shared with BLACK CORPORATE by JPMorgan Chase. The banks Small Business Pulse Survey surveyed 1,000 small business owners to learn more about their financial and strategic business priorities and where the businesses are doing after two tough years of economic uncertainty.
The report surveyed 150 black small business owners. The comments reflect the findings of these respondents, but not of all black SBOs in the overall survey.
Ben Walter, managing director of Chase Business Banking, provided email responses related to funding and other survey results. Chase Business Banking provides financial advice as well as deposit, credit and cash management products to 4 million small business owners with up to $20 million in annual revenue.
Why are black small business owners more likely to seek additional funding to meet challenges? What are the main reasons?
According to a recent report by JPMorgan Chase Institute“Black Americans generally have less wealth than their white peers, which is also true for black SBOs [small business owners]“, says Walter. He adds that black business owners start out with less cash to invest in their businesses and need access to capital earlier to help their businesses thrive.
Walter confidently notes that rising black entrepreneurs are looking to scale their business by investing in their workforce, digital tools, and other capital expenditures, which may explain the additional need for funding.
“We are also seeing increased interest in entrepreneurial training and mentoring among Black business owners due to the challenging macroeconomic environment.”
Walter says it’s Chase new mentoring program has already supported over 1,200 minority entrepreneurs by providing essential access to expert coaching, technical assistance and workshops to help them lay the foundations for business growth.
To boot, 73% of Black entrepreneurs revealed they were more likely to extend their benefits over the next year, compared to 63% of total respondents. Walter says small business owners now need to have a differentiated value proposition when it comes to hiring and retaining talent, and so are investing in incentives, benefits and training while increasing wages.
“We know that black business owners have been disproportionately impacted by the pandemic and have cut staff and closed businesses at higher rates than their white counterparts.” Walter says this survey data may suggest that black business owners are making up for what they have lost over the past two years while planning more accelerated expansion plans relative to their peers.
Another survey finding found that 58% of black business owners are more likely than 33% of white business owners and 43% of Hispanic business owners to say their outlook for their business has become more positive. since the start of the COVID-19 pandemic.
New business creation is at an all-time high, he adds, with a particular boom in black-owned businesses, as data suggests the number of black Americans who started businesses was nearly 30% higher. higher in 2021 than at the start of 2020.
Last year, Kristelle Bellfounder of Surprise Powerz in Chicago, launched her toy-making business that instills confidence in preschool girls by selling STEM-themed dolls.
She says she expects her business in 2023 to see further growth and financial opportunity.
“The courage and resilience that we have shown in just one year of activity gives me confidence for the year to come,” she says.
“Knowing that I have a financial partner (Chase) who understands my business model and helps me find new opportunities for growth and funding gives me peace of mind and inspiration to keep moving forward.”