New Opinion Poll Reveals Insights into Small Businesses’ Struggles Accessing Capital and Federal Relief
Latest national survey by Small Business Majority highlights setbacks business owners of color have encountered in accessing capital, hampering their financial recovery
(Washington, DC) - As Congress advances a $1.9 trillion stimulus package to counteract the ongoing COVID-19 crisis, Small Business Majority released results from a new poll today that underscore the ongoing need to deliver comprehensive, long-term relief to struggling small businesses. More importantly, the survey provides further insight into the disproportionate impact of the economic downturn on entrepreneurs of color, who faced systemic barriers to accessing financing and business resources pre-pandemic.
The poll reveals that before the pandemic, more than 1 in 5 small businesses did not have an existing business banking relationship with a traditional financial institution or credit union. Small business owners of color were much less likely to have a business banking relationship pre-pandemic: 31% of Black, 28% of Asian American Pacific Islanders (AAPI), and 26% of Latino business owners reported not having a business banking relationship in place.
When seeking out capital, small business owners of color have encountered more setbacks than their white counterparts. While 1 in 5 (19%) small business owners overall have obtained less financing than they sought, this number is higher among AAPI (36%), Black (31%), and Latino (26%) small business owners.
These issues likely resulted in many small businesses facing roadblocks when seeking out emergency relief programs last year, as relatively few small businesses have secured federal funding. Thirty percent of small business owners surveyed have applied for the Paycheck Protection Program (PPP), and of those who received a PPP loan, only one-third received the full amount requested. This number was even lower for entrepreneurs of color: only 23% of Black, 23% of AAPI and 27% of Latino small business owners report they received the full amount.
Additionally, fewer small business owners have sought funding through the Economic Injury Disaster Loan (EIDL) program, but entrepreneurs of color were more likely to apply (21% overall compared to 37% of Black, 35% of AAPI, and 27% of Latino small business owners).
The survey also continues to shed light on the need for robust grant programs. As small business owners found it difficult to navigate the federal loan process, it comes as no surprise that 80% of small business owners support providing direct grant assistance to see them through the crisis. An additional 4 in 10 small business owners report they will need no-cost grants or zero interest loans in order to keep their doors open.
“Being a successful entrepreneur is already a balancing act of trying to keep the lights on and build a legacy; however, the financial burden compounded by the pandemic has pushed many small business owners to our limits,” said Ellen Victoria Luckey, owner of Victoria’s Kitchen in Richmond, V.A. “This is why a robust grants program is critical to the survival of our businesses and our employees, and we need Congress to act on this now.”
The poll gauged small businesses’ views on additional policy proposals to increase the availability of capital, and the most popular idea is to increase funding to nonprofit small business lenders (more than 7 in 10 support) to allow them to make more loans to businesses that may not qualify for financing from traditional lenders.
"As this survey reveals, small business owners, especially entrepreneurs of color, faced significant barriers to accessing capital before the pandemic, and these struggles set many up for failure when trying to access federal relief programs last year," said John Arensmeyer, Founder & CEO of Small Business Majority. "Congress must address this issue head-on in the next stimulus package by passing a robust direct grant program to ensure vulnerable small businesses have the tools they need to survive the ongoing crisis."
This poll represents the opinions of 500 small businesses nationwide with oversamples of Black, Latino and AAPI entrepreneurs and was conducted by Lake Research Partners for Small Business Majority. For a copy of the full report, please visit: https://smallbusinessmajority.org/our-research/access-capital/small-businesses-struggling-access-capital-harming-their-financial-recovery
About Small Business Majority
Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy. We engage our network of more than 80,000 small businesses and 1,000 business and community organizations to advocate for public policy solutions and deliver resources to entrepreneurs that promote equitable small business growth. Our deep connections with the small business community along with our scientific research enable us to educate the public about key issues impacting America’s entrepreneurs, with a special focus on advancing the smallest businesses and those facing systemic inequalities. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.