Los Angeles | The Covid-19 pandemic has weakened a large number of SMEs in the United States, but the effect is more devastating for small businesses run by African-Americans, who often find it more difficult to obtain bank loans.
The resurgence of the epidemic as the end of the year celebrations approach, a crucial period for the financial health of local businesses, is likely to push more than one to go out of business.
Especially since the positive effect of the monster demonstrations against racial and economic inequalities of the summer has lived.
In Los Angeles, authorities decided Wednesday to close bars and restaurants on the eve of Thanksgiving.
In the south of the metropolis, the restaurant specializing in spicy meals Hotville Chicken had already had to close its room. He must now abandon the terrace.
“It’s going to hurt,” laments its owner Kim Prince. This African-American, however, remains optimistic: with take-out and delivery, “it may not be catastrophic.”
The new rules do not apply to stores like “One of a Kind Hats”, which sells hats.
But “business is not going strong,” notes its owner Meeka Robinson Davis. Her clients no longer have much opportunity to go to mass, weddings or other celebrations, and her turnover has fallen by 70%.
At least three stores have closed on his street.
The number of small businesses run by black people fell 41% between February and April, compared to just 17% for companies run by white people, according to a study released in August from the New York branch of the Mighty Reserve. Federal (Fed) published in August.
Fragile relations with banks
The weaker relationship of the black community with bankers has put member-run companies at a disadvantage when it comes to preparing applications for emergency loans granted by the government to SMEs.
“Covid-19 has exacerbated these problems and businesses in hardest-hit communities have experienced huge disparities in access to federal relief funds and a higher rate of business closures,” Claire Kramer Mills found , Assistant Vice President at the New York Fed.
In Los Angeles, assessing how many businesses have closed is complicated because some have moved or reduced their activities to a minimum, explains Joe Rouzan III, director of an association that works for economic development in the south of the city.
“We will not be able to apprehend the full impact of the Covid before the pandemic disappears but we know that it has done serious damage,” he said.
Some companies have limited breakage using the internet.
Eso Won Books, for example, kept orders online when it rolled down its curtain in March.
Sales have clearly fallen and wages have had to be cut, says co-owner James Fugate.
But the trade saw an unexpected spike in activity in June, as protests started to ramp up after the death of African-American George Floyd, after being mentioned by author Ibram Kendi during a interview.
Thousands of orders for books on anti-racism and the history of the black community have poured in, even forcing the bookstore to temporarily suspend its online sales service.
Grants, not loans
Selling online isn’t right for all businesses, like One of a Kind, which makes tailor-made hats and serves customers who want to see products up close, Davis notes.
His shop did well make and sell cloth masks. But to pay the rent, she had to dig into her savings and rely on public aid.
She also got a loan of $ 27,000 from a government program but hopes she won’t have to use it.
“I don’t want to be suffocated by debt,” says Mme Davis.
While the difficulty of obtaining credit at the right rate for African Americans is often denounced, major banks have pledged in recent months to provide better terms for communities of color.
But Mr. Rouzan greatly prefers grants, such as the $ 500,000 given to his organization by Netflix to help businesses run by black people stabilize.
“Getting into more debt is the last thing these companies need right now,” he notes.