Black-owned businesses have been almost twice as likely to fail as businesses overall during the current pandemic, according to a study released Tuesday by the Federal Reserve Bank of New York
The study determined that a major reason for this was that Black-owned businesses are heavily concentrated in cities that have been hardest hit by the virus and they entered the pandemic with weaker financial conditions.
The study found a "disturbing relationship" between areas that have been hard-hit by COVID-19 and the economic health of Black-owned businesses, said Clair Kramer Mills, assistant vice president of the New York Fed.
The Black-owned businesses "had weaker financial conditions, weaker bank relationships and preexisting funding gaps prior to the pandemic," she noted.
The New York Fed study found that 40% of the revenue from Black-owned businesses is concentrated in just 30 counties, roughly 1% of all the counties in the United States. And among these counties, about two-thirds are those that had the highest level of COVID-19 cases.
The report found that between April and June, nearly $521 billion in loans in the Paycheck Protection Program to support businesses had been distributed but that the support did not reach some of the hardest hit areas.
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"Businesses in the hardest hit communities have witnessed huge disparities in access to federal relief funds and a higher rate of business closures," Mills said.
The New York Fed report said that in the 30 counties where Black-owned businesses were seen as particularly susceptible to closures, about 15% to 20% of the businesses received PPP loans.
The report said while those rates were not too different from the national business estimate of 17.7% of businesses receiving PPP loans, there was a much wider discrepancy in some areas.
Only 7% of businesses in the Bronx got PPP loans and just 11.3% of those in Queens, N.Y., and 11.6% in Wayne County, which includes Detroit, the report said.
