RI’S BIPOC ENTREPRENEUR + BUSINESS OWNER NEEDS
programs and to develop new initiatives that are open and welcoming to them, and providing critical support as they start and grow new ventures. While many important ecosystem assets are in place, they are not being accessed by Rhode Island’s BIPOC entrepreneurs. These disparities will not be eliminated without the active engagement and direction of these businesses in the processes of identifying gaps and designing effective solutions.
Capital Rhode Island’s BIPOC entrepreneurs are perhaps most vocal in their concerns about their limited capacity to easily access the many sources of business capital available in Rhode Island and across New England. On paper, Rhode Island is a treasure trove of funding sources to start and grow new companies. But the practical reality is that many of these potential funders are not providing resources to support the start-up and growth of BIPOC businesses in Rhode Island. Recent experience with Federally-backed pandemic funding sources is instructive. As of May 2021, Rhode Island businesses had received nearly 15,700 SBA-backed Paycheck Protection Program (PPP) loans with a total value of more than $966 million. 3 While detailed demographic information on those who received PPP loans is incomplete, Federal Reserve data suggest that BIPOC-owned firms faced many challenges accessing PPP and Economic Injury Disaster Loan (EIDL) loans during the pandemic. 4 Black- and Hispanic-owned firms were less likely to apply for these funds, with a large share of these business owners reporting that they were unaware of programs or faced burdens in applying for the funds. When they did apply, their applications were more likely to be rejected or they were less likely to receive the full amount of requested funds. The challenges faced in accessing COVID-19 related funds are not unique to Rhode Island; they are commonly found across the US. As Rhode Island’s business and community leaders develop new solutions, they can at least build on a relatively diverse and robust set of potential business funders doing business in the state. Prominent publicly-backed funding sources include RI Commerce’s Small Business Assistance Program, the Slater Technology Fund, and various locally-backed loan funds, such as those operating in Providence, Cranston, and Pawtucket. While a large number of funding programs are in place, they are often difficult to access by BIPOC entrepreneurs. Additional actions are needed to develop new funding streams and to ensure that existing programs and capital sources are effectively serving all of Rhode Island’s entrepreneurs. First, Rhode Island needs to support the development of home-grown capital pools targeted to BIPOC business owners and to those operating in distressed neighborhoods. At present, Rhode Island has only one CDFI or CDC funder that is headquartered in Rhode Island, the consumer-focused Capital Good Fund.5 RI Commerce should consider supporting efforts to charter a new Rhode Island-based CDFI or to ensure that Rhode Island-based firms can more easily access CDFI resources located elsewhere. This recommendation
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U.S. Small Business Administration, Paycheck Protection Program Report: Approvals as of 5/21/2021. Available at: https://www.sba.gov/sites/default/files/2021-05/PPP_Report_Public_210502-508.pdf. 4 U.S. Federal Reserve, Small Business Credit Survey: 2021 Report on Firms Owned by People of Color. Available at: https://www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2021/sbcs-report-on-firms-owned-bypeople-of-color. 5 However, a large number of out-of-state CDFIs do include Rhode Island in their service areas.
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