The pandemic has hit black and Hispanic business owners the hardest in South Africa
Cerissa Tate was busy designing dream kitchens for her clients’ luxury homes and making her own plans to grow the interior design business she started ten years ago.
By early 2020, she was financially prepared for the generally slow first months of the year. But she was not prepared for what was to come as the pandemic persisted.
“After that it was a complete shutdown for a while,” said Tate, owner of Industrious Interiors. She tightened her budget, moved in with friends, and provided consultations through Zoom. Small jobs finally came to her.
“I survived the pandemic. I did not prosper, ”she said.
Many small business owners like Tate were unprepared for the kind of disruption to their operations brought on by the pandemic.
Before COVID-19, the average small business only had 15 days of cash on hand, according to research by financial services firm Next Street and the community investment nonprofit Common Future working with the Local Initiatives Support Corporation.
The study presented to members of the City Council’s Economic Development and Workforce Committee on Tuesday found that black and Hispanic business owners in San Antonio were hit hardest. This is despite the fact that Hispanic and Black residents represent 60% and 9% of the population, respectively, but only own 24% and 2% of all businesses.
Common Future board member Ellen Shepard presented the study results
He assessed the business ecosystem of nine cities and found that in the years leading up to the pandemic, “ingrained barriers to capital” suppressed the sustainability and growth of businesses in San Antonio.
In 2017, the gap between the supply of capital and the demand for small businesses was estimated at $ 8.3 billion. The number of small loans available (less than $ 100,000) and medium-sized loans (between $ 100,000 and $ 250,000) – critical to the growth of microenterprises in the region – was extremely low.
Low commercial bank lending rates were most prevalent in the southern and eastern neighborhoods of San Antonio, where there are high concentrations of black and Hispanic residents.
Across the country, businesses owned by people of color have closed at higher rates during the pandemic than businesses owned by white people. They also faced larger cash balances and declining income.
The Next Street study grouped the affected industries into three categories: hardest hit, or those that closed or were at risk of shutting down; impacted but prosperous; and isolated with potential.
In Texas, black-owned businesses operated more commonly in hardest-hit industries, such as food services, personal services, and gas stations, while Hispanic-owned businesses operated more in affected industries. but surviving, such as construction, transportation and wholesale.
Between January and September 2020 in San Antonio, total small business revenues decreased by 45% and the number of small businesses opened decreased by 35%.
Tatu and Emilie Herrera closed their 2-year-old Southside, Folklores cafe when the pandemic began. “That’s when everyone got scared, that’s when no one came out,” Tatu said. “So we closed our business, and then we started helping seniors in our community.”
Their landlord told them not to worry about the rent. But six months passed and the Herreras were getting more and more into debt. They missed a deadline to apply for a paycheck protection program loan. Emilie Herrera was fired from her human resources position and the tax bill fell due.
Meanwhile, the Herreras were unable to opt out of the lease they signed before the crisis for a new site on the East Side. This store opened in July.
“We’re doing a little better now, but it’s always one of those things where we’re in a hole just trying to get out,” Tatu Herrera said.
It will be a long climb. Herrera had used his retirement savings to open the first store. Faced with the foreclosure of their house, he and his wife seek other accommodation. Still, he feels lucky.
“I have a lot of friends who have small businesses, and a lot of them have a lot worse than us,” he said. “Many of them have lost everything.”
The experience has taught Herrera, who once held workshops in his cafe for his clients to learn about topics like using credit wisely, which he will do differently in the future.
“It’s all changed a lot of things, changed the way I do business, changed the kind of place I want to rent next time around,” Herrera said. “[Getting] a loan, of course.
The study found that when it comes to loans to small businesses, San Antonio has high levels of loans from Community Development Financial Institutions (CDFIs) and low levels of loans from the Small Business Administration compared to other areas with a similar number of small businesses, such as Indianapolis. or Dallas.
CDFI loans are typically provided by LiftFund and PeopleFund, two nonprofit lenders with a long history in San Antonio and the state.
Next Street research concluded that business owners of color in San Antonio lack not only capital, but also access and knowledge of the services they need to survive, sustain and grow their business.
It also showed that the city’s small business ecosystem needs more coordination and the resources to serve area business owners, especially in predominantly black and Hispanic neighborhoods.
“Unfortunately, it reminds me of the [COVID-19] vaccination card, ”said District 4 Councilor Adriana Rocha Garcia, referring to a study map that indicates areas of the city where business services are absent or minimal. “And again, if you look at access to the vaccine, [and] where we saw the COVID cases and everything is the same story again. “
Shepard said the research team used the study to make several recommendations to bring together donor groups to coordinate local funding and monitor initiatives.
“We’ve found that while the individual service providers are strong, they don’t necessarily act in a coordinated fashion,” Shepard said. “They lack formal modes of collaboration and shared parameters and goals. And… something we heard early on in San Antonio, almost that exact verbiage, is that San Antonio makes a lot of plans, but doesn’t necessarily take action.
District 5 Councilor Shirley Gonzales said she looked forward to seeing more real implementation based on the study’s findings, especially with regard to small business loans, and put challenged JPMorgan Chase and other banks to deliver.
“We look forward to greater support from the private sector to address some of these issues because… in the public sector we can do our part,” Gonzales said. “We can try to create different policies, [but] we cannot do it without the support of the private sector. ”
Interior designer Tate has weathered the worst of the pandemic with his business intact. The summer civil unrest and the Black Lives Matter movement grabbed attention and customers. Now she wants to get back on track to achieve her goals.
“I have visions of becoming a business where I have other designers working with me, as well as a small warehouse and staff for it,” she said. “So at some point I’m probably going to take out a loan or rent a building. … Anyway, I want to grow my business, so it’s not just me, absolutely.