According to a report from the Federal Reserve Bank of New York, nearly half of Black small businesses had been wiped out by the end of April as a result of the coronavirus pandemic.
The report found that Black-owned businesses were more than twice as likely to close down than their white counterparts.
“Nationally representative data on small businesses indicate that the number of active business owners fell by 22% from February to April 2020—the largest drop on record,” the report said.
The report estimates that 41% of Black-owned businesses across the country shut down between February and April. About 32% of Latinx businesses and 26% of Asian businesses shut down over the same time span. Only about 17% of white businesses shut down during the same period, the study authors found.
The report’s authors cite a lack of financial savings, less access to capital, including federal PPP loans, and funding gaps that existed prior to the pandemic as causes for the demographic disparities.
“Covid-19 has exacerbated these issues and businesses in the hardest hit communities have witnessed huge disparities in access to federal relief funds and a higher rate of business closures,” the authors wrote in their report.
Black businesses tend to be concentrated in metropolitan areas where more Black Americans live. The report found that almost 70% of Black businesses are located in areas with the highest levels of Covid-19 cases.
“This tells us that a more targeted geographic focus on the hardest hit and most underserved places is needed,” Mills said in a statement about the report. “This brief shows the disturbing relationship between high geographic incidence of Covid-19 and the economic health of Black-owned businesses.”
The percentage of Black businesses that have permanently closed has most likely increased since the study was performed, as the pandemic has continued to drag on and the government has provided very little economic aid for Black businesses.