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Published

August 04, 2020

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Report Summary

POLL SHOWS MINORITY-OWNED SMALL BUSINESSES HARDER HIT BY PANDEMIC

MORE MINORITY-OWNED BUSINESSES FEAR PERMANENT CLOSURE, STRUGGLE TO SECURE LOANS

Minority-owned small businesses have been disproportionately impacted by the coronavirus and the accompanying economic fallout, according to the MetLife & U.S. Chamber of Commerce Special Report on Race and Inequality on Main Street.

The poll finds that two in three (66%) minority-owned small businesses are concerned about having to permanently close their business versus 57% for non-minority small businesses. However, the gap has narrowed significantly from May, when 52% of non-minority-owned businesses said they were concerned about closing versus a staggering 78% for minority owned businesses.

Minority-owned businesses are also slightly more likely to report trying and failing to secure a loan to help survive the economic turmoil (13% versus 8% of non-minority businesses) linked to the coronavirus.

The poll also revealed shifting attitudes toward minority-owned small businesses. There has been a 17-point increase from the beginning of 20201 in the number of small businesses believing minority-owned small businesses face more challenges than non-minority owned ones, from 52% in January to 69% in July. There was an even more significant jump among nonminority-owned small businesses, where in Q1 47% agreed and 40% disagreed; now, 67% agree and just 24% disagree.

Furthermore, two-thirds (66%) of all small businesses acknowledge that minority-owned businesses have been disproportionately impacted by COVID-19.

Most small businesses also think it is important for them to act in the wake of the recent protests over racial inequality. For example, four in five (79%) say it is important to make a commitment to fairness in hiring, promotion, and pay. In addition, three quarters (74%) say it is important to support local Black-owned small businesses.

Report Highlights

  • Minority owned businesses slightly more likely to have tried and failed in securing a loan. Minority owned businesses are slightly more likely to report trying and failing to secure a loan to help survive the economic turmoil (13% versus 8% of non-minority businesses).
  • More minority-owned businesses expect revenue to decrease. The number of minority owned businesses expecting revenue to decrease in the next year has increased fivefold (5% in Q1 to 24% now) compared to a much smaller two and a half times uptick for nonminority owned businesses (7% in Q1 to 17% now).
  • Gaps exist in views around reopening. Minority-owned businesses are more concerned about the risks COVID-19 poses to their customers and employees (70% versus 58% of nonminority-owned small businesses).
  • Differing views on reopening guidance. Minority business owners are slightly more concerned around the lack of guidance on reopening (62% versus 54% of non-minority businesses).
  • Minority businesses report more competition. 44% of minority-owned businesses say the level of competition they’re facing has increased compared to six months ago (before the pandemic began), versus 27% of non-minority-owned businesses who feel the same way.
  • Majority of small businesses believe it is important to take steps toward racial equality. The two actions seen as particularly critical are making a commitment to fairness in hiring, promotion, and pay (79% view this as important), and supporting local, Black-owned businesses (74%).
  • Small businesses report taking some form of action to address or promote racial equality this year. 35% of small businesses have issued a statement of support for racial equality and fairness, 28% have found ways to support local, Black-owned businesses, and 18% report reevaluating their hiring, promotion, and compensation practices.

[1] Beginning in Q2 2020, the MetLife/U.S. Chamber of Commerce Small Business Index survey has been conducted via a monthly online survey, in place of the typical phone-based approach. This methodological shift is in response to anticipated lower response rates in dialing business locations as a result of mandated closures related to the COVID-19 outbreak. While significant changes in data points can largely be attributed to the recent economic environment, switching from a phone to online approach may have also generated a mode effect.