From the Publisher

Hi there! Welcome to the May/June business issue. Continuing the conversation around the racial wealth gap, I asked the Founder and Executive Director of City Startup Labs, Henry Rock, to share his thoughts about the barriers Black business entrepreneurs face when trying to grow successful businesses. I'm pleased to share his column with you below.

The Color of Money:

Barriers for Black Business Owners

Henry Rock, Founder and Executive Director of City Startup Labs

To understand the barriers for small minority (more specifically, Black) businesses, one needs to start with an appreciation for the context that created the circumstances that challenge these businesses in the first place. We could say that deck was stacked against us from the very beginning – including the decks of the ships that carried us here. The barriers originated then.

In a 1619 Project essay, Matthew Desmond wrote, “In order to understand the brutality of American capitalism, you have to start on the plantation.” He continued, “Nearly two average American lifetimes (79 years) have passed since the end of slavery — only two. It is not surprising that we can still feel the looming presence of this institution, which helped turn a poor, fledgling nation into a financial colossus. The surprising bit has to do with the many eerily specific ways slavery can still be felt in our economic life.”

Throughout the 20th century, whenever there was an opportunity for Black folks to amass wealth, especially within our more insular communities — for some strange reason, doing our thing was considered either a threat, the subject of envy, looked upon with distain or dismissed as lacking “real intrinsic value.” This perspective was supported and often designed, in large part, by the Federal government, where policymakers wrote off and even bulldozed these same communities and with them, the prospects of creating the intergenerational wealth available to their white counterparts. While other “minority” communities have also experienced inequities, injustices and marginalizing policies — Black communities (in particular) have received the greatest oppressive blows to our attempts at building wealth. In fact, in his book “The Color of Money,” Mehrsa Baradaran wrote, “Black racial segregation was so complete and so entrenched, that it is the defining characteristic of racial inequality in the 20th Century and the major roadblock to economic progress.”

During the past 60 years, one presidential administration after another has trotted out a re-branded version of “pulling oneself up by their bootstraps” messaging — placing the onus of overcoming systemic barriers to wealth creation on the very people victimized by the system. Generation after generation of Black people have believed that new forms of capitalism and ownership meant them too. Yet, what Black entrepreneurs have discovered is that the largest barrier they face is a lack of capital.

According to the United States Federal Reserve System data, banks deny loan applications from Black business owners more often than any other racial group. These businesses had a loan approval rate of 46.6 percent compared to an approval rate of 75.3 percent for white business owners. This statistic reveals Black entrepreneurs face fewer chances of success than a coin’s toss of being approved for a bank loan, with the odds overwhelmingly against them.

Mehrsa points out that Black banks face the same barriers to capital, “Relying on these banks to do the work of achieving wealth equality without changing the economic environment in which they operate is unfair, cynical, and fruitless,” he wrote. “The Black community needs banks to grow and prosper, but the banks cannot achieve that growth and prosperity alone. Self-help microfinance cannot overcome macro inequality and systemic racism.”

A 2018 Federal Reserve Bank of Minneapolis analysis concluded, “The historical data reveal that no progress has been made in reducing income and wealth inequalities between Black and white households over the past 70 years.”

While the majority of banks in Charlotte are making genuine overtures to support Black-owned businesses, until they commit to closing the lending gap, and bolster those businesses that have traction and show promise, I’m afraid another average American lifetime will have passed, and folks will still be wondering — what now? P