Black Entrepreneurs and Their Role in Economic Empowerment and Community Development

Large gaps in earning potential and wealth accumulation have always existed between different racial populations in the United States. And no demographic has faced a steeper economic uphill climb than Black Americans.

After listing contributing racial inequalities in areas that range from student loan debt to medical care, the independent investment information resource Investopedia singles out a persistent lack of access to startup and expansion capital as a primary challenge for aspiring Black entrepreneurs. Banks and other lending organizations have long been reluctant to work with Black Americans.

When a Black entrepreneur does manage to start a business in the United, that business is historically more likely to struggle or fail. For example, the Jim Crow laws that arose during the racial segregation of the early 1900s made Black-owned businesses extremely vulnerable to discriminatory targeting and destruction. Similar examples of institutional racism persist to this day.

While it's important to recognize that systemic barriers and economic disparities still persist, it’s also incredibly vital to acknowledge that real progress has been and continues to be made. Black entrepreneurs have demonstrated a remarkable level of resilience and determination, overcoming adversity to pursue their dreams of business ownership.

Building strong support networks within the Black community has played a crucial role in the success of many Black entrepreneurs. These networks provide access to mentorship, education, advice, and funding, as well as help navigate the challenges inherent to starting and growing a business. Many Black entrepreneurs have also chosen to create businesses that positively impact their communities, further contributing to economic empowerment and community development.

In response to overcoming discriminatory lending policies, alternative funding sources such as community development financial institutions (CDFIs), crowdfunding platforms, and angel investors have emerged to focus on supporting underrepresented populations in the business sector. Such initiatives support diversity and inclusion in venture capital and corporate investment to begin to address the capital gap.

Government programs and policies like Small Business Administration (SBA) loans, Minority Business Development Agency (MBDA) resources, and initiatives promoting supplier diversity in government contracts have also helped provide opportunities and resources to Black-owned businesses. Through a combination of government support and grassroots, community-based initiatives, there is plenty of cause for optimism regarding the state of Black entrepreneurship moving into the future.

From Madame C.J. Walker to Janice Bryant Howroyd, Black American entrepreneurs have a rich history of driving social change. Beyond blazing new trails in the business world and showing other Black business leaders the way, they have served as a powerful force for good in the Black community, often employing large numbers of people and injecting a tremendous amount of capital into the economy. Many Black entrepreneurs also launch or support initiatives to build public infrastructure or provide charitable services in the communities that they serve. For these reasons and many more, the US Small Business Administration supports a range of advocacy, funding, counseling, and training programs to encourage the creation and development of minority entrepreneurs from underserved communities.

While the initiatives of organizations like the Small Business Administration are certainly important, the Black community has done much to support Black entrepreneurs at the grassroots level. As discussed above, most Black consumers like the idea of buying goods and services from Black-owned businesses. Other ways to build a supportive ecosystem for Black entrepreneurs include widening access to business training and developing strong and mutually beneficial community relationships among business, educational, religious, government, and nonprofit entities.

Building a business ecosystem that eliminates barriers to entrepreneurship for Black Americans could add an estimated $290 billion in business equity to the US economy. Beyond the Small Business Administration, there are many other public, private, and nonprofit organizations with a range of resources for aspiring Black entrepreneurs. These organizations include:

• The Black Business Association
• The Minority Business Development Agency
• The Coalition to Back Black Businesses

The benefits of Black entrepreneurship extend far beyond business to engender dramatic transformations in the realms of economic empowerment and community development. It is important to do whatever you can to further these transformations by supporting Black entrepreneurs in your community.

If you are a current or aspiring Black business professional considering an entrepreneurial career, you can make a difference by starting your enterprise with the full confidence that only a solid business education can provide. eSpelman offers a range of online business training opportunities through its online certificate programs, including an Entrepreneurship Certificate Program that imparts foundational business knowledge while honing students’ entrepreneurial skillset.

For more information about the Entrepreneurship Certificate or any other Spelman College certificate, complete a short online information request form or attend one of our virtual information sessions.