Black Banks and Crowdfunding: Venture Noire, Startup Junkie Discuss Solutions to Challenges Facing Black Businesses

Even before the pandemic, Black-owned businesses faced unique challenges, such as lack of funding and resources. Photo by Brandy Kennedy/Unsplash

Greer Jackson, Howard University News Service

During the COVID-19 pandemic, many businesses have experienced economic hardship – resulting in either a severe decline in revenue or the need to halt operations completely.

“Statistics will tell us that over 180,000 businesses closed because of COVID and about 96,000 of those were permanently closed. Those facts are even more haunting for minority owned businesses, “said Alvin Singh, speaking at a panel hosted by organizations that support entrepreneurs, like Venture Noire and Startup Junkie. Singh is a program associate at Startup Junkie, whose mission is to improve lives through innovation and entrepreneurship. 

Even before the pandemic, Black-owned businesses faced unique challenges, such as lack of funding and resources. According to Emma Willis, director of the US Midwest region at Venture Noire, this is part of a larger issue: a lack of overall preparedness for minorities entering the world of entrepreneurship.

“What we’ve observed in our work is that when it comes to a lot of minorities, the foundation has not been set, nor have they been given the guidance on what to expect or anticipate on the road of becoming an entrepreneur,” she said. 

This is the type of preparation that Venture Noire creates an environment for, as a nonprofit organization which seeks to assist Black and minority entrepreneurs, with a larger goal of addressing income equality. 

For many Black-owned businesses, reduced access to capital has only worsened with the pandemic. A national study on coronavirus aid for small business led by University of Michigan researchers found that Black business owners were about 30 times less likely to receive government assistance than White business owners since the pandemic began.

Additional statistics provided during the panel showed that only 12 percent of Black businesses received PPP, the U.S Small Business Administration’s Paycheck Protection Program which  is a loan that helps businesses keep their workforce employed during the COVID-19 crisis.

The panelists also discussed other challenges such as invisible credit history, loan denials, the wealth gap, and of course, unemployment as result of COVID-19. Willis added that necessity has been the mother of invention for small businesses during the pandemic, and that even as more people start to use e-commerce sites like Etsy, an understanding of basic business principles is key.

“It’s the business knowledge and the understanding of how to scale that business appropriately so you can actively make money and stop just spending it. That’s the conversation,” she said.

Apart from solutions such as more access to grants and assistance from the federal government, both Singh and Willis believe in the need for more engagement between Black businesses and Black banks. 

“A lot of times we think of banks as an institution and not as a face,” Willis said. “I think Black banks really give you the opportunity as an African American or a person of color to go in and know that that person understands what you’re going through and what your struggles are.”

She noted that many of these banks, such as One United, are structured to give people the confidence to know that they won’t be rejected for a loan because of, for example, a bad credit score. 

Additionally, crowdfunding platforms like Kiva NWA, which focus on minority owned businesses, are crucial. 

“There’s tons of people that wake up everyday and say, who can I support?,” Singh said of the platform. “They look at your story, look at what you’re trying to fund, and they donate.”

Tenisha Gist, whose business was funded through a Kiva loan, explained why this option was so important for her.

“My dream was more tangible through this because it was serving brown and black people in a way where, not only could people that know you support you, but people within the region could see what it is that you’re trying to do and support you,”she said. 

Her business, Talent Kiln, provides mentoring for interns and matches them with appropriate companies.

Looking ahead,  with no end to the pandemic currently in sight, it’s people like Tenisha who will begin to forge new paths for what it means to be an entrepreneur, and support within the community will be increasingly important.

“As far as the generations, it comes back to them understanding investing in family and investing in one another,” Willis said.