New Opinion Poll: Small Businesses Owned By Entrepreneurs of Color More Than Twice as Likely to be Temporarily Closed

A new survey of Small Business Majority’s network released today reveals that even as economic conditions are starting to improve for some small businesses, small businesses owned by entrepreneurs of color are disproportionately lagging behind white-owned businesses. 

The poll, which is the seventh in a series of COVID-19 related surveys of Small Business Majority’s network, finds 15% of Latino and 13% of Black entrepreneurs say their business is temporarily closed, compared to 6% of white business owners. Overall, 11% of businesses say they are closed temporarily.

The survey also finds that 35% of Black entrepreneurs report that business conditions are worsening, and 37% say they may not survive the next three months, compared to one in four business owners overall who say they may not survive beyond the next several months without additional funding or other market changes. This comes as 36% of small businesses overall say conditions are somewhat improving for their businesses compared to one month ago, and 5% say they are greatly improving. 

“Thanks to the vaccine rollout we're starting to see more customers in our store, which makes us feel a sigh of relief,” said Alap Vora, owner of Concord Market in Brooklyn, NY. “At the same time, we know the road to recovery will be long: Our sales are down 50% this year. That’s why we need access to grant-based programs, like the Restaurant Revitalization Fund.”

Small Business Majority also surveyed its network of entrepreneurs on their experiences with the Paycheck Protection Program (PPP) to gauge their understanding of and experiences with important rules changes. In late February, the White House announced new rules concerning self-employed individuals, sole proprietors and independent contractors, allowing them to calculate their loan amount based on their gross revenue, rather than their net profit, on their Schedule C. 

Roughly 1 in 3 small business owners in Small Business Majority’s network were unaware of this change to make PPP eligibility more generous for solo business owners and independent contractors. When asked about how the new PPP rule changes may impact their business, 1 in 3 (34%) said they have applied for PPP using the new calculation. Meanwhile, nearly 1 in 5 (18%) reported they applied under the old rules and are not eligible to reapply, and 25% said they need more time to apply under these new rules now that they are aware of them. Four percent said they have a pending PPP application and are trying to change their application or have changed it to take advantage of the new calculation.  

Given the challenges surrounding PPP, and the fact that funds will expire on May 31, Congress should move quickly to pass legislation introduced by U.S. Sen. Ben Cardin (Md.) and several of his colleagues that would allow self-employed individuals who previously applied to PPP to re-apply under the new rules that made PPP more generous for the self-employed. Sixty-eight percent of small businesses support allowing those who applied previously based on their net profit to retroactively reapply based on their gross income.

“Our survey shows that small business owners are still facing a long road to recovery, and optimism about economies reopening is not translating into improved business conditions for many entrepreneurs, particular those of color,” said Small Business Majority Founder & CEO John Arensmeyer. “If Congress does not keep small business front and center in its policymaking, we will see even more businesses close their doors for good in the weeks to come."

This poll reflects a national survey of 533 small businesses from Small Business Majority’s network between March 26 to April 13, 2021. Most respondents own very small businesses with fewer than 10 employees (46%) or are self-employed (26%). Forty-seven percent are owned by people of color and nearly two-thirds are owned by women. For the full report, visit: https://smallbusinessmajority.org/our-research/survey-1-in-4-small-businesses-facing-closure