Inclusive Entrepreneurship Is Key to Unlocking Equal Opportunity

This paper is a collaboration between the Progressive Policy Institute (PPI) and Prosperity Now. Read the full report here.  

Small businesses are the lifeblood of our communities, as they play a critical role in building intergenerational wealth and creating opportunities for community members. Entrepreneurs of color, however, face serious roadblocks to business development that have stifled wealth building in Black and Latine communities for decades. The COVID-19 pandemic and its enduring economic consequences have only exacerbated many of these issues, as Black, Indigenous, and People of Color (BIPOC) business owners were hit the hardest by the lockdowns and the economic slowdown that accompanied the early pandemic. This makes it more critical than ever to understand the barriers to inclusive entrepreneurship and how we can most effectively address them. 

Bolstering Inclusive Entrepreneurship Is Key to Equal Opportunity,” a report Prosperity Now released in partnership with the Progressive Policy Institute (PPI), seeks to do just that. The report takes a deep dive into the structural factors that shape inequitable business outcomes. Lack of capital access is one of the most significant impediments. Not only do BIPOC entrepreneurs have fewer opportunities to raise funds from friends and family than their White counterparts, but discriminatory lending practices also limit their access to bank capital. In fact, Black business owners are about half as likely to receive requested loans than White-owned businesses with similar credit histories

BIPOC business owners also have unequal access to business management training and technical support, which are critical in supporting business development. In addition, entrepreneurs of color are less likely to be able to access federal programs intended to benefit small businesses. Despite the existence of many such programs, insufficient outreach about their existence, paired with the lack of a holistic business support network, have prevented many businesses of color from being able to access them. 

The report further highlights initiatives taken by innovative community development organizations from across the country to use American Rescue Plan Act (ARPA) funds to support their local small businesses during the COVID-19 pandemic, with a focus on businesses of color. In Maryland, the Baltimore BASE Network initiative is connecting small business owners to business assistance programs by promoting data sharing and network building between the Baltimore small business and business support communities. In Pierce County, Washington, the Pierce County Business Accelerator provides a “Business 101” course to local entrepreneurs and helps connect small business owners to business assistance programs and management consulting services. In Wilmington, Delaware, West Side Grows Together is providing local small businesses with microgrants to help them pay for daily expenses that can quickly add up and drive a business into closure. These various organizations have all emphasized the importance of centering Black and Latine-owned small businesses in developing urban communities.  

The report concludes by elaborating on how policymakers, city leaders, and lenders can tear down structural barriers to inclusive entrepreneurship and promote opportunities for business growth and development in BIPOC communities. Ensuring equitable access to credit and banking is of paramount importance. While policymakers must leverage existing policies intended to promote equity in credit access, lenders must also come up with new and creative financing structures that are tailored to the needs of entrepreneurs of color. Policymakers must further expand access to business assistance programs and help develop linkages between BIPOC businesses and the business assistance sector. Finally, there must be greater transparency in data sharing to help assess the needs of businesses of color and whether they are being met. 

Now is the time to reaffirm our national commitment to equity, by ensuring that small business owners of color have the same opportunities as their White counterparts. To read more about how inclusive entrepreneurship can create a more equitable and prosperous economy, read the full report here. 

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