In Arizona and across the country, Black business owners continue to lack access to capital and capital to grow their businesses, a new study from the Entrepreneur Equity Alliance finds.
According to the study, nearly 40 percent of Black-owned businesses have been denied a loan, line of credit, or cash advance when seeking financing, compared to just 18 percent of white-owned businesses. . This means black entrepreneurs are turning to non-traditional sources of financing, such as financial technology, online lenders and community development financial institutions.
According to the 2023 State of Black Business Report prepared by the Greater Phoenix Economic Council and Black Chamber, organizations in Arizona are increasing It says it aims to facilitate access to capital for minority-owned businesses. of Arizona, JPMorgan Chase and SRP.
Although there are approximately 1,200 black-owned businesses in Arizona that employ multiple employees, the majority of black-owned businesses in Arizona are sole proprietorships, meaning the business owner is the only employee. said Imani Augustus, director of the Entrepreneurial Equity Alliance. he said, citing data from the U.S. Small Business Administration. There are approximately 30,000 black-owned independent businesses in Arizona.
“This is a policy opportunity to secure more investment for people to grow their businesses,” she said.
Velma Trayham, CEO of the Arizona Black Chamber of Commerce, said in March that one of the organization’s pillars is financial access and readiness, educating people about the underwriting process and partnering with financial institutions. He said he would establish a venture fund to connect black business owners with capital.
In Arizona and other parts of the country, black-owned businesses are concentrated in specific sectors.
“Black-owned businesses in Arizona are most prevalent in personal services, food service, household consumer product manufacturing, and retail. These industry sectors have relatively low economic and technological barriers to entry. ” state the authors of “State of Black Business.” “This is not surprising given the unique challenges to access capital that this business class has historically faced,” the Arizona report said.
Augustus said these industries are similar to trends in Black entrepreneurship across the country.
The Entrepreneur Equity Alliance, formed in 2022 to foster an equitable economic recovery, is working on a national policy platform that encourages Black and minority entrepreneurship. A key part of the platform, Augustus said, is to expand access to new markets, access to capital and the development of entrepreneurs.
These ideas reflect the Arizona State plan developed by Trayham, who started in mid-March. Trayham outlined the organization’s priorities at an event in March to introduce himself as the organization’s new leader.
“I believe entrepreneurship is the driving force behind ending poverty,” Trayham said at the event.
Trayham said the Black Chamber’s focus areas include expanding access to contracting opportunities that remain lagging behind for minority-owned businesses. Black-owned small businesses across the country will receive only about 1.6% of available federal contract funding in 2022, according to a study by the Entrepreneurs Equity Alliance.
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