By Kimaria Howard-Lewis
In a year which has presented some of the greatest challenges small business owners have faced, there has been a disproportionate effect on diverse-owned businesses, including those owned by Black and African American entrepreneurs. While the Q2 Wells Fargo/Gallup Small Business Index survey relatively high of optimism among these owners in June, with seven out of 10 saying their current financial situation was somewhat or very good, the ensuing time has continued to bring challenges to this community.
As Black and African American business owners continue to look ahead, there are some key considerations that can be made to plan for a future where certainty is categorically uncertain.
Challenges obtaining credit
The Q2 survey specifically highlighted what has continued to be an issue for Black and African American business owners: access to credit. These owners reported the highest levels of both current and predicted future difficulty accessing credit compared to other segments surveyed. Challenges receiving the same consideration for or amount of credit as others are particularly pronounced in the current environment, where these businesses are struggling to stay afloat.
In looking for a solution, it must be acknowledged that the financial services industry as a whole must continue addressing this problem. Diverse-owned businesses have more challenges ahead of them as they stage a comeback. They are often smaller in terms of number of employees, payroll and startup capital, and they may not have established banking relationships. These factors make them much more susceptible to economic downturns, and they will need greater access to capital and innovation to be resilient in this pandemic.
Resources that offer access to capital is a deficit that Black-owned businesses face every day. Making credit options available to diverse business owners can make or break the business. In addition to traditional lending, working with Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) can provide additional avenues to access capital.
Supporting these institutions and their mission is at the heart of the creation of our Open for Business Fund, the first phase of which has provided additional funding for these institutions to continue their important work, including the Northwest Native Development Fund based in Central Washington. Another resource available to business owners, whether you bank with us or not, is the Small Business Resource Center site where you can create and update business plans, learn about credit and how to properly use it once obtained, marketing tips and much more.
Flexibility and Leadership
Community involvement and interaction (virtually and otherwise) is a great way to create a support network and become a change agent in your community. Black and minority-owned businesses can use the power of the pivot in times such as these. When conditions change, adjusting the business plan, budget and marketing strategy will be beneficial, as well as communicating with employees and customers about changes happening going forward. Being transparent and having solid plans while moving through changes in these unpredictable times makes all the difference for your business, but most of all for your customer service needs. Making a plan for “possible pressure points” will ease the business owner’s mind as well as those who support them.
Where do we go from here
There’s little about the future that seems predictable right now. A good place to start is with the things that can be controlled, such as putting customers first, being a community leader, and understanding the most effective business planning tools and resources. While success is never guaranteed, taking these steps can certainly move the needle in the right direction.
Financial institutions have a lot of work to do to create an equitable system and take care of Black and African American-owned businesses. Share your feedback with your bank. Let them know what you need and where you see things falter. The only way to create change is to pinpoint the issues and share your suggestions to help create change.
Kimaria Howard-Lewis is a Wells Fargo business banking specialist based in Federal Way.
