Local Black business owners met Monday with U.S. Small Business Administration leader Isabella Casillas Guzman to discuss some of the unique challenges and goals they face.
Guzman, a member of President Joe Biden’s Cabinet, visited Framingham alongside U.S. Rep. Katherine Clark, state Sen. Karen Spilka, Mayor Charlie Sisitsky and others to meet with Black business owners, who shared their personal stories about the challenges they have faced in trying to get their businesses off the ground.
Brandale Randolph, owner of The 1854 Cycling Company, a Framingham-based electric-bike manufacturer, pointed out during a roundtable discussion that Black business owners get almost no attention from venture capitalists, making them much more reliant on other ways to invest and expand their business. He added that the most helpful way to secure capital comes through grant funding, which has been promoted by the state.
“Of all the venture capital that is raised, Black business owners only get 0.56% of it,” Randolph said. “So we have to go through loans, self-funding, investing from family and things like that. One thing we have found very helpful through the state are matching grants — that helps ease the concern about private equity.”
Phiona Kikoyo also faces that problem. Having rapidly seen her business, a home décor company that specializes in handmade pillows, grow during the pandemic, Kikoyo is looking to expand beyond her Marlborough home, but lacks the capital to invest in a brick-and-mortar location.
“Business was amazing — it was booming because everyone is sitting on their couch, realizing they needed better pillows,” Kikoyo said. “But I was overwhelmed, because I couldn’t get help because I was by myself, at my home, with my kids and my partner, who also works from home. It’s not going to work running out of my house, I need a place to go, but the rent is a lot to afford. I’d love to have a brick-and-mortar place where people can come and shop.
“Right now if someone wants a pillow, they have to come to my house.”
Kikoyo is aware of grants that help businesses expand without getting entrepreneurs into large amounts of debt, but has been unable to secure one. She hopes that by speaking with leaders like Guzman, Clark and Spilka, she can help herself and other business owners who are succeeding but need a boost to expand on their success.
“Trying to find grants, or loans, or even getting someone at a bank to talk to you, is really difficult,” Kikoyo said. “I’m hoping to help get the capital to expand my business, and that is going to come through grants.”
A struggle to access capital
Guzman said she frequently hears about the struggles Black business owners have in accessing capital, and that the SBA and federal government are working to ensure they’re not facing prejudice when they apply for investments.
“The common thread is often around access to capital,” Guzman said. “Wealth disparity, and how that impacts your ability to launch your business, that is a common thing Black business owners are facing nationwide — a disparity when they walk into a lending institution and they aren’t getting the capital they need or that they’re credit worthy (enough) to get. The SBA is really focused on trying to ensure that credit-worthy businesses can access capital more effectively, regardless of race or background or ZIP code.”
Guzman said the government learned a lot through the Paycheck Protection Program and other COVID-19 programs, and that there were shortcomings discovered in how businesses access federal programs.
“What we learned during PPP and through the COVID-relief programs is that we need broader distribution networks in order to reach all businesses and meet them where they are,” she said. “Black businesses are often online, as well as dependent on mission-focused lenders and communities, and so we want to make sure we are diversifying our network of lenders and investors so that they can better reflect the communities, because that lack of investment is what creates the economic disparity.”
Black business hit hard during pandemic, but also thrive
Clark, whose 5th Congressional District includes Framingham, said the pandemic had a disproportionate impact on Black business owners, but that actions from the government have been made to try and jump-start entrepreneurship in America.
“At the start of the pandemic, Black-owned small businesses were closing at twice the rate of their white counterparts, and it was a make-or-break moment and one that needed decisive action,” Clark said. “We passed the American Rescue Plan, which was a transformative plan for our economy. It didn’t just prevent disaster, it helped kick off a new golden age of entrepreneurship.”
Clark said that as the pressures of pandemic have eased, the country is seeing a rapid and renewed interest from Black entrepreneurs.
“In 2021, new Black-owned businesses were opening their doors at the fastest rate in a quarter century, so we have made incredible progress over the last few years, but we still have a long way to go,” Clark said. “We need that to build an economy that truly works for everyone, we have to root out discrimination, we have to invest in child care, and guarantee family leave.”
Laurette Ndukwe, who owns Nzuko Restaurant, which hosted Monday’s gathering, thanked officials for making it easier for her to hire immigrants, which have allowed her to both ensure her restaurant is properly staffed, and also provide opportunities to young people from Haiti.
“We brought in family from Haiti, because Joe Biden has given us the opportunity to sponsor Haitians to come work here. I’ve applied for 10, I’ve got seven so far, that is my support team in the kitchen,” Ndukwe said. “These kids are educated kids, some of them were doctors in Haiti, some in engineering school. They are professional kids that really want to go to school here, but this gives them a chance to learn the language and work in America and my business can support them.”
Guzman pointed out that businesses frequently lose out on opportunities to expand because they don’t have sufficient investment at the appropriate time, an issue that may be accelerated for Black businesses, which face more challenges in securing that investment.
“Morgan Stanley published a study a few years ago that estimated that more than $4 trillion was lost as a result of underinvestment, meaning they couldn’t create the jobs that they should be able to if they were invested in appropriately,” Guzman said. “That leads to them not creating the economic output, and we need all of our businesses to be working at 100%.”