Small businesses owned by people of color and immigrants need relief

From the onset of the COVID-19 pandemic to the uprisings following the murder of George Floyd, we knew our Black-, brown-, Indigenous- and immigrant-owned businesses faced catastrophic losses that could devastate the culture, wealth and economic vitality of our communities. We also knew that the employers and entrepreneurs who most needed relief funds would not have access or eligibility without significant changes to how those resources were distributed.

So, over the past year, the Business Resource Collective has convened and united more than 20 cultural and place-based business associations, BIPOC-led community organizations, chambers of commerce and arts organizations to ensure that state leaders create intentional policies and priorities that address rather than increase the racial economic disparities in our state.

We have come to the table with specific solutions. We have met with state leaders at the highest level who have shared their support — but have not translated that talk into action. As the governor, lawmakers and agency leaders negotiate the final budget and bills from the legislative session, it is imperative that they follow through on their commitments to racial equity and include explicit provisions to support and nurture BIPOC businesses.

The need for a targeted approach couldn't be more clear. A survey of Black businesses in Minnesota conducted by the African American Leadership Forum in late 2020 found that 62% of businesses had experienced reductions in their revenue and 40% were struggling to pay their bills. In March 2021, a research report from the New York Federal Reserve and AARP found that 90% of Asian American-owned businesses had seen a 60% reduction in sales. And according to the Minnesota Department of Employment and Economic Development, 1 in 3 people of color in the state's labor force have applied for unemployment during the pandemic — far higher than the percentage of white workers.

Given these losses in business revenue and catastrophic unemployment, our partners have seen requests triple over the last year for technical assistance for both accessing relief resources and starting new businesses and microenterprises.

Our collective has shown that the engagement and funding of community-based and culturally specific partners to create a supportive ecosystem is essential. For instance, working with Hennepin and Ramsey counties to improve their business relief programs' reach, we helped ensure that more than 50% of applicants were from BIPOC business owners. In comparison, 90% of small businesses in both counties are white-owned.

We need to see that same collaboration and intentionality at the state level.

We saw it in the governor's budget priorities presented in February, which included relief carve-outs for businesses with fewer than six employees, for "minority"-owned businesses and for ethnic malls, as well as $3 million per year in new supports for small businesses especially hard-hit by COVID-19. Those critical priorities must be reinstated.

The final budget also must include intentional investment in the essential ecosystem of groups that reach and support BIPOC-owned businesses. We've demonstrated the essential role of technical assistance from culturally specific and community-based organizations in breaking through the systemic barriers previously preventing BIPOC businesses from accessing relief resources. An investment of $5 million from America Rescue Plan money can ensure our entrepreneurs have the support needed to reopen, recover and grow.

BIPOC small businesses continue to need access to relief grants, not loans — not only because loans are more cumbersome for the state and qualified lenders to manage, but also because many businesses are wary of taking on debt with an unknown timeline to recovery. Any relief program must provide a budget for outreach and technical assistance; include and allow for culturally based organizations to be administrators to the programs; include sole proprietors and home-based businesses, and prioritize equitable outcomes over quick turnarounds.

Recognizing that BIPOC small businesses are disproportionately microbusinesses and sole proprietorships, we must look beyond this recovery moment to seed the growing landscape of BIPOC entrepreneurs. Establishing the microenterprise development program included in the former House omnibus bill would be a significant wealth-building opportunity for Minnesota's BIPOC communities and position the state as a leader.

Our communities have been commemorating the life of George Floyd, coming together in love and resilience to make visible the ongoing trauma of systemic racism that exists not only in policing but in the ways government programs support and subsidize wealth creation for some while under­investing in our communities of color.

As organizations that work with BIPOC small businesses every day, we know the specific steps necessary to address these economic disparities. We have shown the efficacy of our recommendations in real time. And we have shared our insight with state leaders. The time for action is now.

Claire Thomas is economic development coordinator at the East Side Neighborhood Development Company. Denise Butler is director of economic development at African Career, Education, and Resource Inc. Kit Fordham is executive director of the Mni Sota Fund. Va-Megn Thoj is executive director of the Asian Economic Development Association. They wrote on behalf of the Business Resource Collective.