While the COVID-19 Pandemic has enabled many government supports for SMEs, Black-owned businesses are still faced with financial challenges, with only about 50% aware of available supports for Black businesses.
Vancouver, BC — Insights West conducted a survey in partnership with the Black Entrepreneurs & Businesses of Canada (BEBC) and Vancity, aimed at understanding the business challenges faced by Black businesses in Western Canada.
The BEBC was formed to provide a unified platform for advocating and supporting Black Entrepreneurs in Canada to help them grow, scale up, and become sustainable. Out of an estimated 800 Black owned businesses in Western Canada, Insights West surveyed 207 of them in the summer of 2021.
While SMEs across Canada face similar challenges, Black owned businesses are impacted disproportionately. First, our survey found that access to capital was the #1 business problem faced by Black-owned SMEs, with over one half (53%) reporting lack of access to capital as one of their top three challenges. Next on the list was a lack of marketing (36%), followed by difficulty finding clients (24%).
Second, most Black-owned businesses are in start-up or early stages mode, and the lack of access to capital has meant that many are funded out of pocket. For the vast majority of these start-ups, personal savings is the #1 source of funding (78%) to kick start the business. More than 7-in-10 (71%) Black-owned businesses are in either start-up mode or in the initial growth phase, and the remaining 29% are either established, in expansion, or in the mature stage.
The third factor is that COVID-19 has had a negative impact on a significant proportion of Black-owned businesses (85%), including a negative impact on financing of the business (73%), business revenue (72%), profitability (70%), business expenses (67%), debt (57%), and staffing (52%).
While various government programs have been instrumental in helping Black-owned businesses get through the pandemic, application and qualification among these businesses has been relatively low: Canada Emergency Business Account (CEBA) (31%), provincial grants (20%), Canada Emergency Commercial Rent Assistance (CECRA) (18%), and Canada Emergency Wage Subsidy (CEWS) (13%). Further, although 56% of Black business owners are aware of the newly launched Black Entrepreneurs Loan Program – a loan fund created through a partnership between the Government of Canada and Federation of African-Canadian Economics to provide loans of up to $250,000 to Black business owners and entrepreneurs across the country – only 2% have applied thus far, indicating a perception of barriers for Black-owned businesses.
“Part of the reason we were approached for doing this particular poll is to demonstrate the critical mass of this unique segment of business entrepreneurs in Western Canada, and to understand these unique differences,” says Steve Mossop, President of Insights West. “It is encouraging to see those in the start-up phase with all of the challenges faced in that phase of operations getting support from our Federal Government to help leapfrog into the 2nd and 3rd stages of growth along their business path.”
“This survey and the results from it confirm and cement what we have known and been expressing for a while when it comes to Black businesses & entrepreneurs and the ecosystem at large in Canada. Black business owners lag in all kinds of supports and ability to make their businesses work and grow. The BEBC Society exists to help bring change to these businesses as well as tell their success stories of hard work, resilience, contributions to the labour and economy of the provinces and country, as well as the continued aim to add diversity to the business ecosystem in Canada,” says Jackee Kasandy at BEBC Society.
“The decision around who has access to capital – who gets approved for a loan, and who is declined – is one of the most important drivers of equity and fairness in our economy,” says Andrea Harris, Director of Community Investment at Vancity. “Streamlining the business loan process removes the human element that contributes to the biases that disadvantage Black business owners when seeking a loan, and this leads to more responsible banking practices overall. Rectifying centuries of racial injustice and exclusion in finance will not happen overnight, but programs such as the Black Entrepreneurship Program are an important step,” continued Andrea.
To view the full report, click HERE
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