According to a report by Merchant Maverick, Black-owned businesses opened in record numbers during the pandemic.
In the 18 months between February 2020 and August 2021, Black-owned companies increased by almost 40 percent, the report said.
Ranking these openings by state, MerchantMaverick.com, the business product comparison site for small business owners, found the mid-Atlantic to be particularly ripe for Black entrepreneurship with Virginia, Maryland and Delaware appearing in the top five slots.
Southern states generally dominate Merchant Maverick’s ranking and just one northern state counted among the top 10, Ohio.
“In a time when businesses are closing left and right, it’s great to find that there is a segment of the economy which is growing so well,” said Julie Titterington, editor-in-chief, MerchantMaverick.com. “We all look forward to seeing if this growth rate can sustain itself as the economy generally improves.”
Researchers analyzed data from sources including the U.S. Census Bureau’s 2020 Annual Business Survey, The US Bureau of Economic Analysis and TaxRates.org.
Four metrics equally accounted for 75% of the overall score: Black-owned employer businesses per capita; percent of the workforce employed by Black-owned businesses; average annual payroll of Black-owned businesses; and the average yearly income of Black business owners.
Still, obstacles remain for Black businesses. For example, only 2.3 percent of the employer businesses in the U.S. are Black-owned even though African Americans make up over 14 percent of the population, Merchant Maverick said.
Additionally, Black-owned businesses face significant inequities when it comes to payroll.
The national average annual payroll for employer businesses, $1.25 million, represents a total for the annual payroll average for Black-run employer businesses, $301K.
The report pointed to funding gaps as playing a significant role for the differences in yearly payroll totals. Earlier research by the Stanford Institute shows that white-owned businesses receive an average of $18,500 in outside equity at the founding, compared to just $500 for Black-owned firms.
Already starting at a disadvantage, Black businesses continue to face hurdles while attempting to catch up down the stretch, said the report.
The top 10 states for Black entrepreneurs in 2022 include (in descending order): Virginia, Maryland, Texas, Nevada, Delaware, North Carolina, Ohio, New Mexico, Georgia and Alabama.