COVID-19 Takes Disproportionate Toll On Small, Minority-Owned Businesses In US

COVID-19 Takes Disproportionate Toll on Small, Minority-Owned Businesses in US

Barrington M. Salmon - US small businesses, especially those owned by Blacks and Hispanics, have been hit hardest by the pandemic with no end in sight despite billions of dollars in government stimulus loans

WASHINGTON (Pakistan Point News / Sputnik - 24th November, 2020) Barrington M. Salmon - US small businesses, especially those owned by Blacks and Hispanics, have been hit hardest by the pandemic with no end in sight despite billions of Dollars in government stimulus loans.

Last week, US Democratic congressional leaders met with President-elect Joe Biden at his home in the state of Delaware to discuss the need to pass new COVID-19 legislation, including relief for small businesses. US lawmakers failed to strike a compromise on a new COVID-19 stimulus package before breaking for the Thanksgiving holiday.

The US Treasury Department's Small Business Administration agency has approved more than $525 billion in Paycheck Protection Program (PPP) loans that were part of a $2.2 trillion stimulus package Congress passed earlier in the year. However, many small businesses still proved incapable of weathering the COVID-19 economic lockdowns as the pandemic grew worse.

On multiple occasions in the past couple weeks, the US hit new all-time daily highs in COVID-19 case counts, with more than 12 million recorded overall including nearly 257,000 related deaths. Attempts to contain the spread have included mandatory shutdowns of nonessential businesses and advisories calling for social distancing and other measures.

Hundreds of companies that received PPP stimulus loans have filed for bankruptcy, according to a Wall Street Journal analysis of government data and court filings published on November 17. And it appears this trend will not stop anytime soon, especially among minority run shops.

Some 44% of minority-owned small businesses nationwide could not afford to make the November rent payment - 12 percent more than nonminority-owned companies - an Alignable poll revealed earlier this month.

Xiomara Pena, vice president of engagement at the Small Business Majority advocacy group, said 1 in 3 small business owners and 41 percent of Black-owned businesses will not make it in the next three months without assistance from the Federal government.

"Well, we're going on nine months, and it's fair to say many small businesses are struggling. Black and Latin small business owners have been disproportionately affected," Pena told Sputnik. "They are considerably higher closings in these two groups and consumer spending has affected revenue."

Pena said the uncertainty is absolutely impacting people's ability to plan.

"There are increased costs needed to operate in a COVID world. Consumer spending is not necessarily keeping businesses afloat and operating with very thin pocket margins is devastating," Pena said.

Pena said those involved in the hospitality, personal service and food and beverage industries have been hardest hit by coronavirus, and she expects many businesses will continue cutting back operations.

Meanwhile, unemployment is widespread with two-thirds of hourly small business employees not working. Pena said as the country moves into a long winter, business owners need additional support.

"Small businesses are economically important and are major job creators. There needs to be stability for a smooth recovery process. There have been some grant programs to help people get capital, but the need is great," she said.

One way entrepreneurs are weathering the storm is to adjust to the COVID headwinds by going online. However, "brick and mortar" businesses have found it more difficult to pivot, Pena said.

Some small businesses have been fortunate enough to survive, largely due to adapting to conditions, although many in-person service companies are struggling to adjust. Black-owned Rejuve Rejuvenation Suites in Chicago, which provides tools around mindfulness and taking care of one's mental health, is one such business that relies on the physical presence of patrons.

The owner, Florence Hardy, said Rejuve is a studio available to anyone who needs a place to rest if, for example, they have checked out of their hotel but have some hours to kill before going to the airport. Rejuve also provides space for those seeking to sit still and meditate.

Hardy, a serial entrepreneur and lawyer by trade, said she positioned her business on the "Miracle Mile," a prime-time strip in downtown Chicago near Lake Shore Drive, because there is an estimated 10,000 office workers in a one-mile radius. However, with the reemergence of another COVID-19 wave, her business has faltered.

"I thought it would be for a short while and figured it could pick up... It's stressful," Hardy told Sputnik. "Of course, it is sort of fearful because you don't know how it [COVID-19] is or works. I am having to make difficult decisions about the product, mail and ordering."

Hardy said Rejuve, which is located in a high-end mall, was damaged in the looting that occurred in Chicago after police officers shot and injured a young Black man. This required Hardy to shut down even longer.

To stay afloat, she launched the "Best Rest Box," a combination of four products which create restful and relaxing environments for customers along with virtual resources.

Fifth-degree Black Belt Master Renard Beaty is another business owner who has been forced to embrace change.

"I had to adjust fast," said Beaty, owner of Kickstart Martial Arts near Grant Park in Atlanta, Georgia. "I had to handle Public Relations, downsize and get ready for re-opening. I had to invest in upgrading the WiFi, hire staff and we handled teaching and screening."

Beaty said the revenue his business generated lasted for the first two months of the pandemic.

"Now I'm back to where I was pre-COVID," he told Sputnik. "If people don't get help or make money, I lose because this is discretionary income they're using."

Beaty said he has concerns about securing funding to remain solvent. With three employees, he has been holding online classes and has seen the membership of his martial arts business decline.

He applied for both PPP and an Employee Injury Disaster Loan (EIDL). He received $3,000 through EIDL, which is significantly less than the $10,000 he needed. Beaty said PPP funds allowed him to have some "breathing room" to keep his business operational for another eight months.

However, Beaty said he is not yet out of danger and has had problems paying the rent.

At least Beaty can tap into martial arts in dealing with the problem mentally to get through what might be a long and hard winter.

"There is a certain technique called 'easy mind' when sparring. You don't anticipate or guess. You don't overthink it. It has taught me to be calm, to relax, to figure things out," Beaty said.