The coronavirus (COVID-19) pandemic closed 22% of small businesses across the U.S. between February and April, according to a brief from the Federal Reserve Bank of New York (NY Fed). Near double that number, or 41% of black-owned businesses, closed versus closure rates of Latinx (32%), Asian (26%) and white business owners (17%).

Business location matters. Black-owned firms are geographically concentrated in COVID-19 hotspots, according to the NY Fed, where white-owned firms are less likely to be.

The implications of doing business in a COVID-19 hotspot are harsh. “There is a positive relationship between COVID incidence and the share of a county’s businesses that are Black-owned,” according to the NY Fed, “an indication that areas with higher concentrations of Black businesses are more likely to be facing larger direct (longer forced closures, COVID-19 symptoms) and indirect (social distancing, fewer customers) effects of the pandemic.”

The NY Fed brief plotted white business activity and COVID-19 incidences. Their findings reveal that areas with higher numbers of white-owned business have fewer COVID-19 cases.

We turn to the federal COVID-19 relief programs for businesses, small, midsize and large facing steep declines in consumer demand from closures due to the pandemic. There has been a lack of equal access to such relief.

“The Paycheck Protection Program,” according to the NY Fed, “the federal government’s signature relief program for small businesses, has left significant coverage gaps: these loans reached only 20% of eligible firms in states with the highest densities of Black-owned firms, and in counties with the densest Black-owned business activity, coverage rates were typically lower than 20%.”

Firms with payrolls and sole proprietorships were able to apply for round one of the PPP of $349 billion to finance salaries, benefits, utilities, mortgages and rent payments. A second round of PPP allocated $310 billion.

Gaps in PPP coverage persisted across hard-hit metropolitan areas as federal relief began. “Research from the New York Fed and the University of Chicago found that loans from the first round of PPP were not correlated with the number of COVID-19 cases in a state,” according to the Fed.

Shaundell Newsome is a Las Vegas-based Black small businessperson. He applied without success for a PPP 1.0 loan. Undeterred, he, a military veteran, applied for a PPP 2.0 loan.

“The tragedy is how Black-owned small businesses received relief from the federal government that was too slow or non-existent,” Newsome told MultiBriefs via email, “assuring that most would not succeed in this sudden crisis.”

Private lenders and Black business owners have had a rocky relationship. “Black-owned firms — both employer and nonemployer — apply for financing at equal or higher rates than white-owned firms but are denied at higher rates,” according to the Fed brief.

Roshaun Davis is co-owner of Unseen Heroes, a Black-owned events planning firm, in Sacramento, California. “It wasn't until this past January (12 years into our business) that we received our first official line of credit,” he told MultiBriefs in an email.

Black firms, out of necessity, have tapped personal and other funding sources to launch enterprises.

“I started my business with money from my personal savings, initially,” said Newsome. “And in 2007 my father put a substantial amount in the company to become my first investor and business partner. Black-owned companies typically have to rely on their own cash or families and friends to get started.”

“People have seen what we are able to create with limited resources,” according to Davis. “Imagine what would be possible if there were an abundance of resources.”