How Twin Cities nonprofits pitched in to help Black business owners weather the recession

Briana Cress' Gorgeous Looks hair salon was in trouble after the state ordered it and other personal-services businesses to close when the corona­virus pandemic hit this spring.

"I was paying my salon rent and overhead before my personal rent and living off credit cards," Cress said. "I was depleting savings by April. I had been looking forward to the spring school prom and wedding season."

The pandemic and recession that followed hurt the prime revenue months for Gorgeous Looks, in Minneapolis' Bryn Mawr neighborhood.

For Cress, the financial pinch was compounded by other developments. Last year, one business partner left to start his own shop and another moved out of state. And her landlord raised the rent at the start of this year.

Cress, who said the shop's annual revenue in 2019 was less than $150,000, bumped against a wall familiar to many small, bootstrap-financed small-business owners in COVID times.

Her survival strategy started taking shape when she met Kenya Mc­Knight-Ahad of the Black Women's Wealth Alliance, which has served 200 Black female-owned businesses in the region.

Cress was referred to a financial counselor at Neighborhood Development Center, which for 30 years has assisted inner-city business owners. She received critical advice and several thousand dollars in loans and grants through the NDC, the U.S. Small Business Administration and Northside Economic Opportunity Network (NEON.)

The plan and funding enabled Cress to overhaul her shop and process for the reopening in June.

"I almost was to the point where I could have lost everything," Cress said. "It was looking bleak."

Even at that, the reopening of Gorgeous Looks was in uncharted waters.

"It was nerve-racking at first," Cress said. "I used to work on two clients at once. Now I could only do one. And there was the masks, the shields, the gloves and more. I had to raise prices. But I'm making it. I've gotten used to it since then. And it's less stressful."

One complication came along when a client tested positive for COVID-19 several days after an appointment. That forced Cress to shut down the business for several days while Gorgeous Looks received a "deep clean."

Cress is serving up to 25 customers a week instead of the 25 to 35 she served earlier. She communicates regularly over social media and an e-mail list of 1,000 to keep customers and other associates informed of developments.

She's proud that she has been able to maintain her business and is operating safely heading into a tough winter.

And she believes she would have shuttered her shop permanently had it not been for McKnight-Ahad, whose wealth-building outfit is part of the growing Black Business Support Collective (BBSC), an amalgam of Black-owned and Black-connected businesses and organizations.

The collective was convened in April by Marcus Owens, executive director of the African American Leadership Forum. He formed BBSC with partners such as the Minnesota Black Chamber of Commerce, Just Law, West Broadway Business and Area Coalition and NDC.

Owens, 39, a former executive at Target Corp. and TCF Financial Corp., has corporate chops plus economic-development experience through several years as CEO of NEON. After two years at African American Leadership Forum, he has gained traction with stakeholders who want to see often-undercapitalized businesses flourish in inner-city neighborhoods and elsewhere.

Nearly 100 Black-owned Twin Cities businesses responded to a BBSC survey that revealed nearly two-thirds were struggling with depressed revenue, 40% struggling to pay bills and 20% in jeopardy of closing.

"There are probably 10,000 Black businesses in Minnesota," Owens said. "About 95% are sole proprietorships. They are in health and beauty, food, professional services, child care, retail and personal-care attendant businesses. We've connected some with capital of $5,000 to $10,000 as needed to help keep them afloat."

Research has revealed that Black-owned businesses typically are undercapitalized and had less access to banks and government guaranteed-loan programs. Small black-owned businesses failed at a disproportionately high rate during the first months of the pandemic, according to a study by the Federal Reserve Bank of New York.

The study found that in the counties across the country that have the highest concentration of Black businesses, the COVID shutdown hit hardest in terms of business declines and failures.

After an outcry in Congress last spring, smaller minority-owned businesses started to get more of their share of SBA payroll and disaster credit from banks, partly thanks to the work of nonprofit business counselors such as NDC, the Metropolitan Economic Development Association and NEON.

Traditional commercial lenders favored small businesses that were larger, such as car dealerships, for the so-called Payroll Protection Program loans. Congress eventually demanded that the SBA and its lending partners, which got up to 5% of the forgiveable-loan amounts in fees, open a dedicated lane for the smallest of small business.

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.