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This Black History Month, we’d like to celebrate the growing number of black-owned businesses in the United States.
Based on current estimates, there are 3.12 million black-owned businesses in the country, generating $206 billion in annual sales and supporting 3.56 million jobs. This is up from about one million black-owned businesses at the turn of the 21st century.
While there’s been obvious growth in recent decades, there’s still more work that needs to be done to better support these small business owners and their financial needs. After all, more black-owned businesses translate into broader community support, job creation and filling voids in the marketplace.
Some of the earliest black-owned businesses date back to the early 19th century. For example, the first Black-owned insurance business in the United States was founded in Philadelphia in 1810. It was named the African Insurance Company, with Joseph Randolph as its first president. By 1827, the first black newspaper, Freedom’s Journal, was founded in New York by Jamaican-born John Brown Russwurm. It launched the same year slavery was abolished in the state.
Later in Boston in 1900, the National Negro Business League was established by Booker T. Washington, which is now known as the National Business League. The League was created with the purpose of organizing African American business leaders around the United States to establish best practices and support black-owned businesses.
While black entrepreneurship grew over the 19th and 20th centuries, it wasn’t until 1971 that the first black-owned company was listed on the American Stock Exchange. The company of note was Joan and George Johnson’s hair care company, Johnson Products Co.
In 2002, the number of black-owned businesses in the United States topped one million for the first time. Then, between 2002-2011, black-owned businesses saw the greatest growth in new business starts compared to any other minority group in the history of the United States.
Based on the most recent available data from the U.S. Census Bureau in 2020, 2.4% of U.S. businesses with paid employees have black owners. This compares to the July 2022 estimate that black individuals make up 13.6% of the overall U.S. population.
By far the biggest concentration of black-owned businesses is in the Southeast region of the country. The data shows that Atlanta is the city with the highest rate of black-owned businesses in the United States, with 7.4% of the metro area’s businesses having black owners. This is followed closely by Washington, D.C. with 7.0% of businesses being black-owned, and Virginia Beach, VA, at 6.8%.
Regarding the gender makeup of black-owned businesses, black women launch just 4% of the country’s startups, though they have a much larger presence in the small business world. About 35% of all black-owned businesses are led by women, higher than the 27% of businesses that are run by women of other racial backgrounds.
An encouraging statistic regarding the growth of black-owned businesses is that during the pandemic, the search rate for these businesses skyrocketed by 3,085% from February 2020 to February 2021, according to Yelp. This shows the growing intent among consumers to support black-owned businesses in recent years.
Along with this, there’s been a growing movement among prominent retailers including Target and Sephora to showcase black-owned brands and products. In turn, this has created increased opportunities for these business owners and sheds an important spotlight on the incredible products, services and talents of these exciting entrepreneurs.
Clearly, there has been meaningful growth for black-owned businesses over the past few centuries. However, the rift in the percentage of black-owned businesses versus the overall black population highlights there’s still work to be done.
Despite the recent progress, financial institutions need to create more equity in funding so black entrepreneurs and business owners gain access to quality loans at competitive rates. Additionally, there needs to be more accessible and broader business resources – from networking to education – that’ll help black business owners thrive.
Understanding the inequality in the system is important, though putting this knowledge into action is how we can help make real and equitable change. That’s why AVANA’s mission is to deliver “capital for a better tomorrow” for everyone who needs it, regardless of race, creed, sexual orientation and more.
Here at AVANA Capital, we view entrepreneurs as the lifeblood of the economy. We empower black-owned businesses across the country through fast, flexible and reliable financing for a diverse array of industries. Our goal is to support job growth and strengthen communities through our lending solutions. To date, we have helped to create over 10,000 jobs and closed over $1.7 billion in loans.
Established in 2002 and headquartered in Glendale, Arizona, AVANA Capital is a direct lender that serves business owners across the country through fast, flexible and reliable financing. For over two decades, we have empowered entrepreneurs in niche industries, aided job creation and supported clean energy initiatives through competitive financing. AVANA Capital is a proud member of the AVANA Family of Companies.
To learn more about AVANA Capital, connect with an expert and see how we can help finance your business growth.