Black-Owned Businesses Are Still Struggling To Find Investors

The pandemic has forced many small businesses to shut down for good, and unfortunately, the African-American business community has been the hardest hit.

In 2020 alone, 41 percent of Black-owned businesses have been forced to permanently close their doors, compared to less than 20 percent of white-owned businesses. Statistics show that Black-owned businesses are more likely to be in the sectors of the economy hurt the most by the global health crises, such as the food, retail or accommodation industries.

Lack of access to credit is also a hurdle facing Black-owned businesses. Research reveals that Black Americans with small businesses report significant difficulties in obtaining credit, and that discrepancy continues even in Black-owned businesses with annual revenue over $1 million. And despite applying for funding at a rate 10 percent higher than their nonminority counterparts, Black businesses are 19 percent less likely to be approved for a loan. 

In this article, we will highlight some of the obstacles Black entrepreneurs face during their quest to receive adequate funding, and what can be done to lift up Black- and minority-owned businesses to create a more equal playing field.


The pandemic’s affect on the African-American business community

The coronavirus pandemic has disproportionately affected the African-American community, with this segment of the population reportedly contracting coronavirus at a rate three times higher than other racial demographics. Higher rates of infection, coupled with having business locations in historically disadvantaged and underfunded areas, has played a part in the large number of Black businesses that have been forced to close this year. 

If you add the fact that obtaining credit and finding investors is significantly more difficult for Black entrepreneurs, it’s not hard to see why keeping businesses open has become such a challenge. 

Every business needs capital to get started. Having an emergency cash reservoir is even more essential in times of economic difficulties. As the country continues to grapple with systemic racism, making efforts to share resources with historically disadvantaged communities, many Black Americans were able to launch their own businesses in the past couple of years. In fact, one-fifth of Black Americans have reported that they are entrepreneurs starting their own businesses, the highest among any population. 

The coronavirus pandemic could not have come at a worse time to knock down the very people working the hardest to attain equal footing in an already disadvantaged environment. In spite of these heart-wrenching statistics, there are many unique strengths that Black-owned businesses have.


Marketing strategies for Black-owned businesses

In order for any business to thrive, a focus on marketing and building a fan base is essential. After all, how can people buy your products or services if they have never heard about them? A digital presence, specifically in the social media realm, is vital. 

A focus on content marketing is key to building support and gaining awareness for Black-owned businesses. Content marketing campaigns will cost 62 percent less on average than traditional marketing, which should make them appealing for businesses with smaller marketing budgets.  Since the internet is also undeniably oversaturated with existing content, the best strategy for entrepreneurs to stand out is to be truly invested in their community and to create content with relevant posts and images telling their unique story.

Black business owners should also take advantage of their social circle and other Black Americans eager to help small business owners by spreading the word about their products or services as much as possible. Americans of all races use social media at similar rates, meaning it is an excellent avenue for your business to reach business allies.

Studies also show that Black communities tend to be stronger and have more tight-knit, intergenerational families, with more Black Americans living in multigenerational households than white families. It seems as if struggle and hardship can, in some ways, bring communities together to help one another.

Facebook has recently announced a feature that allows businesses to identify themselves as Black-owned on their website, and the corporation also published an informative guide on how Black entrepreneurs can utilize tools and resources available both on and off their website. The guide contains a special section with recommendations on how to get set up with funding and grants. 


Securing funding for your business

If your business needs funds fast–and many do–it’s not necessarily a bad idea to consider applying for a credit card as a short-term solution if other forms of credit are not available. Many credit card companies like American Express and Bankwest offer 0 percent interest for the first six months on certain cards, so if your expense is temporary and paying most or all of it back within that time frame is realistic, this could be a viable path.

An even better option for businesses is to fully investigate all available grants–government or private. Grants are funding that businesses can receive that don’t require being paid back, so they go quickly. Pay careful attention to deadlines or program dates.

Black business owners should also consider small business incubators that can provide more than just funding for their companies. Incubators provide coaching, training and networking for startups, some of which are geared especially for minority-owned startups. There are also diversity-focused capital funds available, such as the Harlem Capital Partners and the Fearless Fund.

Alternatively, many small businesses find success through crowdsource funding, where entrepreneurs can take advantage of the wide reach of social media to solicit many small donations that can add up to a sizable amount.



Black-owned businesses have always struggled with systemic racism, lack of intergenerational wealth, and other barriers to obtaining funding. The coronavirus pandemic made the situation even worse, with almost half of all Black-owned businesses forced to shut down. To help Black businesses, consumers should pay attention to Black entrepreneurs and make efforts to support them rather than contribute to the growth of large corporations. 

Finally, it’s essential for Black-owned businesses to check out funding opportunities in their area. Although funding opportunities can be scarce, the right investors can help those businesses stay afloat until the global health crisis ends and business can resume as normal. 

  • Originally published January 6, 2021, updated April 6, 2022