The Small Business Administration is a government-funded program to provide affordable business loans for entrepreneurs. The loan programs are a win-win situation: Americans with little to no capital can turn their great ideas into a prosperous business and the government can help bolster economic growth in targeted communities. But the keywords here are targeted communities, for it seems that although popular and attractively priced, small business loans are extremely difficult to get if you are Black.
The blog Afrodaddy, a self-help resource for young Black Americans, highlighted ten ways in which corporate and government policies have helped to permanently dismantle any hope for sustained Black wealth over the years. It all started, they wrote,
“in 1876 [when] Jim Crow took over where slavery ended, and the forced segregation of black and white through lynching, intimidation, beatings, etc. effectively created large centralized areas of blacks in less-than-desirable neighborhoods while whites bought property and built businesses in the nicest parts of America. Living on “the wrong side of the tracks” and being huddled into underfunded, undercapitalized areas created the ghettos of today. When white people left these city areas for the suburbs (see “white flight” and theFederal Highway Act of 1956) they took their capital and businesses with them and they did not allow blacks to follow. The result: by the 1960′s you had the vast majority of blacks living in “inner city” ghettos or still in the south in rural areas without much industry or big business.
Now it seems that economic disenfranchisement has taken over where Jim Crow ended, with doors of economic opportunity slamming shut at an alarming rate. From 2007 to now, the number of small business loans to Black business owners fell over 85%, and while all other minorities rebounded out of the recession in 2008 and 2009, the number of Black business loans was on track to fall an additional 10%. In The Deconstruction of Black Wealth, Bob Herbert explains the futile recovery:
The Pew Research Center reported last summer that the median wealth of white households in the wake of the recession was an astonishing 20 times that of black households. The black unemployment rate at the end of last year was close to 16 percent, comparable to the average national unemployment rate during some years of the Great Depression. But even 16 percent does not begin to capture the horror of unemployment in black America. The hardest of the hard-core unemployed are not even included in the official government statistics.
For the business owners who managed to survive, the recession was just icing on the cake of an already one-sided social transaction. Success is less about hard work and pulling yourself up by your bootstraps and more about surviving in an environment of white holders of wealth who practice discrimination economically because they are no longer allowed to do it physically and verbally.
The cold truth is that the chances for success are extremely slim for aspiring black entrepreneurs in an environment in which unemployment is chronically high, inequality of wealth and income is off the charts, and capital of any sort is hard to come by. There is also the continuing problem of racial discrimination. Studies have consistently shown that black-owned firms experience higher rates of loan denial and pay interest at higher rates than white-owned businesses, even after credit worthiness and other factors are taken into account.
While Black Americans are struggling economically to compete entrepreneurially, there is a glint of hope on the horizon. The SBA rejections, the shaken heads at the local banks, and all the rest of society that shakes their finger in resentment and says it’s not possible to go from nothing to something is a sure-fire way to ensure that Black entrepreneurs are better prepared for drastic changes in our economy. When you’re used to being told “no” and having to adapt and overcome to make ends meet, you start to learn that the American dream is a cutesy way for white people to feel comfortable about their undervalued labor and unchangeable economic condition. It will take time, and it will take a lot of work, but as young Black Americans realize how much stronger their minds are because of how terrible society treats them, white America had better be prepared to shut up and learn what it really means to pull yourself up by your bootstraps.