The financial solvency of any small business is precarious, even in relatively stable economic times. The COVID-19 pandemic has been hard on small business owners, whether they were just starting out and hoping to become profitable soon or whether they had established themselves with their target market but could no longer conduct their activities because of restrictions meant to curb the spread of COVID-19. The pandemic has also been disproportionately hard on African-Americans, both in terms of COVID-related hospitalizations and deaths and in terms of loss of income. This is because of the long history of policies that have restricted Black Americans’ access to quality health care, as well as to home ownership and other indicators of financial stability. The data on the wellbeing of Black-owned small businesses align with this trend; they have closed at a higher rate than White-owned small businesses, in large part because of lack of access to loans and other external funding that have kept similar White businesses afloat. Whether you are trying to secure new funding, negotiate about existing debts, or change the direction of your business activities, contact an Alabama small business lawyer.
Entrepreneurship in the Face of Pandemic-Sized Obstacles
A report on AL.com highlights the challenges faced by Black-owned small businesses in Alabama. According to the National Bureau of Economic Research, 41 percent of Black-owned businesses in the United States have closed during the pandemic, which is more than twice the percentage of white-owned businesses that have closed. According to Leavie King III, Chairman of the Mobile Area Black Chamber of Commerce, 20 percent of the member businesses have gone out of business this year. He attributes this to the fact that Black-owned businesses have fewer resources with which to endure a financial disaster; many times, lenders refuse to work with them. Therefore, entrepreneurs start with the resources they have, starting businesses that do not require large loans. These are some Black-owned businesses described in the report and how their proprietors have responded to the challenge of the pandemic:
- Joy King operates a bus tour of restaurants in Birmingham; therefore, her business is largely dependent on tourism and entirely dependent on restaurants being open for dine-in. She will probably have to give up one of the buses, since she has already deferred the loan twice and cannot defer it a third time. Until bus tours can resume, King has been doing more standup comedy gigs online.
- Antonio Boswell, the owner of a small photography and video studio, produces promotional images and films for businesses. With business conventions being cancelled and his business clients having lost their budget for marketing, the company’s revenues all but dried up. He is waiting to see how much business picks up in the next few months to see whether the studio can continue to operate.
The report also highlights the successes of Black entrepreneurs during the pandemic. Black-owned restaurants such as Funnel Cake Queen in Decatur and Eugene’s Hot Chicken in Birmingham have thrived in the pandemic. Lemar Storey, owner of Life Touch Massage, has seen an increase in new clients during the pandemic, as people focus on their health.
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A Alabama business & corporate litigation lawyer can help you choose and achieve your short-term and long-term business goals. Contact Cloud Willis & Ellis for assistance with your case.