After the murder of George Floyd and countless others and a contentious presidential election, much of the recent public outrage over longstanding racial injustices in the United States has rightfully focused on law enforcement and voting access. While attention on these issues should continue unabated, it’s worthwhile to examine yet another manifestation of American racism: inequities in the business world.
When it comes to starting and running an entrepreneurial venture, Black Americans and other people of color face significant disadvantages. The consequences of these inequities include more than the job losses and community disruption tied to a business’s collapse or failure to launch. They also undercut the potential of millions of people of color to bolster our shared economic system and address many injustices in the process.
As the co-founder and CEO of Business Fights Poverty, I have witnessed again and again how businesses can have a big impact on social issues and improve the lives of people all over the world. Entrepreneurs of color provide jobs, inspiration, and investment that empower their communities and alter the political landscape for the better.
Yet the challenges Black entrepreneurs face in the United States are extensive and intertwined with historical injustices. They are still denied or given lower bank loans at more than twice the rate of their white peers; only 1 percent of Black businesses obtain loans in their founding year and they pay higher interest rates. Roughly 20 percent of Black Americans run early-stage businesses, but only 4 percent last more than three-and-a-half years. Eight out of 10 Black-owned businesses fail within the first 18 months, according to CNBC.
With the recent surge in attention on racial injustices, there is an opportunity to examine how we can make progress. Business Fights Poverty—through its years of work with social entrepreneurs, leaders of color, and experts in finance and philanthropy—has consistently encountered a number of frustratingly familiar structural issues that play a big role in determining who gets access to the tools of business success.
Read the full article about entrepreneurs of color by Zahid Torres-Rahman at Stanford Social Innovation Review.
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