Restaurateurs of Color Say They Need Support In Order To Survive Coronavirus Closures

Supermajority Education Fund

May 14, 2020

A group of African American bar and restaurant owners in Boston say that more needs to be done to connect small business owners with the resources and loans needed to survive COVID-19 related closures. The newly formed Boston Black Hospitality Coalition says the city’s Black-owned businesses are experiencing a “state of emergency” and that without immediate support, there is a chance that every Black-owned restaurant in the city will have to permanently shut its doors.

Experts say the situation in Boston’s restaurant scene is indicative of the experiences of business owners of color nationwide. 

“A small restaurant in Boston is different from Shake Shack or Ruth’s Chris, which both got [Paycheck Protection Program] loans. For restaurant owners and a lot of small businesses that are women of color-owned, the profit margin is very thin,” Nicole Mason, president of the Institute for Women’s Policy Research (IWPR), told Supermajority News.So when you go a month or two months without revenue, that has a really swift impact on your ability to stay afloat.” 

Both Shake Shack and Ruth’s Chris Steak House returned their PPP loans after public outcry, but other large companies did not. The controversy highlighted just how difficult it is for smaller businesses to get support, even through programs that were said to be designed for them.

Businesses owned by women of color are particularly vulnerable during the current shutdowns because “women of color small business owners are less likely to have access to capital than other businesses,” Mason said, noting that in 2017 Black women entrepreneurs only received .0006 percent of venture capital funds. “What this means is that there is less liquidity and savings to ride out times like this.”

Additionally, because business owners with strong credit were prioritized for PPP loans, many businesses owned by women of color were automatically not considered for them. The first CARES Act did not consider “how the lack of access to capital or even banking would impact [how minority-owned businesses’] ability to access the relief program,” Mason said.

Mason says it is necessary to support programs created with entrepreneurs of color in mind to ensure that women and entrepreneurs of color are not shut out of future relief packages. “The implementation of targeted programs at the state and federal level for small businesses and minority-owned businesses,” is key, she explained. 

Also essential is more support for community banks, which are more likely to serve Americans of color. Mason notes that because the first PPP program favored both larger companies and larger banks, their clients were also less more likely to get necessary loans. “So what looked like a lifeline simply turned into an impossibility,” she said. “But that is where we saw small banks and small community credit unions stepping up working to support these owners.”