Black women business owners across Ohio seek better access to capital, new survey finds
The youngest of eight kids, Cincinnati native Barbara Smith was eager to stand out.
She forged a unique path, joining only a handful of minority students in her engineering program at Eastern Michigan University in the 1980s. Then, she became one of few Black women in the white, male-dominated construction industry. And in 2009, she co-founded Journey Steel Inc., one of a small number of minority-owned steel production companies in the U.S.
So, when the coronavirus pandemic hit, “failure was not an option” for the battle-tested professional.
“We were able to remain stable,” said Smith, 55, who lives in the Bond Hill neighborhood of Cincinnati. “We weathered the storm.”
RISE survey: Obstacles for Black women made clear in pandemic
Still, it was a challenging experience for Smith, one of approximately 250 Black women who participated last summer in the first iteration of the Ohio RISE Survey, created by the Alliance of Black Businesswomen & Entrepreneurs (ABBE) Ohio. The online questionnaire was designed to track the impact of the pandemic on Black women-owned businesses and assess their needs for survival moving forward.
According to the Ohio RISE report, released in December, the most pressing needs for Black women business owners are access to capital, greater business operational support (including technical assistance) and an equitable opportunity to get private and public contracts.
To gain even more data, ABBE has reopened the Ohio RISE Survey in hopes of reaching 1,000 total women and understanding their experiences in 2021 as the pandemic rolls on. Respondents can fill out the form at bit.ly/BLKWOMENRISE.
The research so far has found that nearly 70% of responding businesses reported a loss of revenue, and 30% were forced to close temporarily. Of those that remained open, 40% had to reimagine their business models. Many had to embrace virtual meetings and online marketing for the first time.
“We had none of that capability,” Smith said. “It was a complete cultural shock and shift to embrace technology.”
Of course, entrepreneurs from all walks of life are struggling to survive, but ABBE founders Gloria Ware and Keena Smith thought it was important to highlight the experiences of Black women, who contend with unique barriers at the intersection of race and gender.
“(We knew Black businesswomen) were going to be in an especially precarious situation, so we wanted to support them,” said Keena Smith, of Columbus, who also founded the Women’s Center for Economic Opportunity. “But we needed to understand more deeply. We knew that we aren’t a monolith. We wanted to hear from women across the state.”
Systemic racism, sexism and their effects take 'emotional toll'
At the onset of the pandemic, Black people were dying of COVID-19 at a disproportionate rate, and Black-owned businesses were shuttering at a higher rate than others — according to multiple reports, including an August 2020 study by Federal Reserve Bank of New York. These events shed light on longstanding barriers to health care, discrimination in banking and the persistent racial wealth gap.
“You cannot solve these issues without taking into account the impact of systemic racism,” said Ware, of Cleveland, who also founded Get the Bag LLC, which supports Black women entrepreneurs.
Additionally, women entrepreneurs often are caretakers and have had to manage their children’s education at home.
That was top of mind for Gayle Saunders, survey respondent and founder of The Saunders PR Group in Columbus.
“We all had to lean on each other from an emotional perspective because we were so worried about our children,” Saunders said of her staff. “I have an elderly sister, and my team members have elderly parents. And so I had to be cognizant of the emotional toll that that plays.”
Additionally, as racial justice protests swept the nation last summer following the death of George Floyd at the hands of police, Black women took on another emotional burden as they went to work each day.
“It weighs on us heavily,” Saunders said. “Those are realities that we have to deal with, too.”
Black businesses' lack of support, resources made PPP loans inequitable
Though she initially had to lay off two part-time employees and dip into her personal savings, Saunders was able to stay afloat with a loan from the U.S. Small Business Administration’s Paycheck Protection Loan (PPP) program.
“I didn't get all that I requested,” she said. “But it got us through the hump.”
Saunders was one of the lucky ones. According to numerous reports, including the Federal Reserve Bank of New York study, many Black-owned businesses were shut out of PPP loans, due in part to historically poor relationships with banks.
Cleveland-based entrepreneur Evelyn Burnett, 36, who also took the ABBE survey, said she was lucky to get a PPP loan, thanks to her accountant and a savvy banker.
“We were able to rely on our banker to say, ‘Well, we're going to just keep going up the chain because I know X white business at Huntington, and their loan was approved there,’” said Burnett, co-founder and CEO of ThirdSpace Action Lab, an event space and consulting firm that specializes in racial equity. “But most people don't have the support for that. And so it's like, how do we expect people to be able to compete? Those stats about who got PPP are shameful because we are taxpaying American citizens, as well.”
'The struggle is real':Black-owned businesses missed out on Paycheck Protection loans
Burnett suggests a simple solution for government officials and philanthropists desiring to help minority businesses: Provide them with accountants.
“We keep applying the wrong interventions based on the needs that we have,” she said. “I cringe every time I see business support agencies offering QuickBooks training, for example. If you put somebody through a six-week QuickBooks training course, that’s six weeks of their time that they don't have building a business and making money so that they can hire a really good accountant.”
Barbara Smith said she also was fortunate; when her bank was not helpful in the PPP loan process, she found a contact elsewhere that provided assistance.
“The industry is still not fair,” she said. “It’s who you know. We would not have gotten it in the first round if we didn't jump ship.”
More assistance:New fund aims to help minority businesses in Franklin County
Black women-owned businesses were struggling to obtain business loans prior to the pandemic. For instance, only 8% of Ohio RISE Survey respondents said they secured capital for startup costs.
Barbara Smith said she blames banks’ unwillingness to move past stringent criteria and get to know the people behind the applications.
“They don’t look at the company’s potential,” she said. “They don’t want to take a risk. You have to get off the paper.”
Certifications seen by potential partners as costly red tape
Black women entrepreneurs are also concerned about certifications such as minority business enterprise (MBE) and woman-owned business enterprise (WBE), which are provided by government agencies to help them gain access to contracts.
They say the process is often time-consuming and difficult, with little guarantee of a payoff, especially for corporations focused solely on getting services for the lowest cost.
“When it comes down to it, especially in the construction industry, it’s the almighty dollar,” said Barbara Smith, who shared that it took her two years to attain the SBA’s 8(a) certification for disadvantaged businesses. “We’ve run into it for 11 years, where certifications have not helped us to win any contracts.”
In some cases, partnering with certified contractors can unlock benefits for corporations. But Burnett said the incentive isn’t enough without a more streamlined process.
“I have had conversations with developers and project managers that say, ‘We want to work with Black firms, and we're really open to diversity, but we're not spending our time on the red tape,’” she said.
Becoming their own advocates, fighting for their worth
Burnett added that Black women are often expected to work for less than what they are worth.
“We spend a lot of time negotiating and proving our value to people despite whatever expertise or credentials that we have,” she said. “We continue to need white spokespersons.”
However, both she and Saunders said Black businesswomen can do a better job of advocating for themselves.
“We don’t tell our own story very well,” Saunders said. "We’ve been conditioned by society: ‘You’re too assertive. You’re too ambitious. You’re too this. You’re too that.' We have to be able to talk about ourselves in a way that paints the picture of our capabilities.”
Black women-owned businesses also struggle with access to government contracts, which is why city officials like Columbus Mayor Andrew J. Ginther issued an executive order in 2020 to remedy the issue. The directive followed a 2019 disparity study by Mason Tillman Associates, which found that Black men and women, in particular, were unsuccessful at gaining city contracts.
When Black women struggle, economies do, too
Keena Smith and Gloria Ware said it was important to collect local, disaggregated data about Black women, from their perspective, given that their experiences are often singular — even among other minority groups.
According to the 2019 State of Women-Owned Business Report by American Express, Black women-owned businesses are growing faster than any other demographic, but their revenue is declining.
In 2019, nonminority women-owned businesses averaged $218,800 in revenue, while minority women-owned businesses averaged $65,800. And for Black women, the number was $24,000.
Additionally, Columbus, Cincinnati and Cleveland were among the worst metropolitan cities for Black women’s economic outcomes, according to a 2020 study by CityLab.
These disparities are having a negative effect on the overall U.S. economy. According to the American Express study, 4 million jobs would be added if the average revenue of minority women-owned businesses was equal to that of their counterparts. Additionally, a 2020 study by Citigroup determined that inequities in business investment, wages, housing and education cost the country $16 trillion the past 20 years.
“Black women play a huge role in making an economic impact in not just the Black communities, but their communities in general,” Ware said. “Closing that wealth gap and addressing some of the disparities from the past actually will benefit the economy overall.”