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Black entrepreneurs can’t afford disparities to persist

WASHINGTON — Jason Harris never imagined that his biggest customer would become the highest hurdle to his success. When Harris launched the Pros1 Corporation nearly five years ago, he scored a service contract with the Washington D.C. Convention Center. He thought his rosy future was assured.

The venue asked Pros1 to staff temps for major events. It was “a great, promising relationship,” Harris said. And then the convention center stopped paying Harris.

“I’m a small business being bullied,” Harris said. “They give you the dream and the idea that you’ll be supported, but they don’t ever want to make the equal commitment that they require of you.”

For 60 days, Harris said he received no payments from the contractor for his company’s hard work and was unable to pay his employees. Harris managed to negotiate with his team and “pay them retroactively.” Harris ultimately realized that, as the owner of a small business, he could succeed or fail at the whim of a bigger player.

“I’m in a position where I can’t voice my disagreements, and I can’t send an email with concerns because the larger company will shut me out,” Harris said.

Black business owners struggle to secure the types of funding that their larger counterparts easily obtain. Such capital would help them survive when a major contractor pays its invoices as swiftly as snails.

According to a 2011 Census Bureau report, the number of black-owned businesses has jumped more than 60 percent since 2002. Still, in what may surprise those who favor government intervention in this area, Small Business Administration (SBA) loans to black-owned businesses have plummeted from 8 percent before the Great Recession to just 1.7 percent in 2014 throughout the country. Black entrepreneurs receive about 2.3 percent overall of all SBA loans. They tend to represent much smaller sums than the loans typically offered to borrowers of other racial backgrounds.

Black entrepreneurs usually have smaller amounts of generational wealth to tap.

“So, it’s not as though many of our entrepreneurs have parents or grandparents who can say, ‘Here’s x amount of dollars. Now go start your business,’” explains Dr. Travell Travis, assistant dean at the Hampton University School of Business. “That proves a disadvantage.”

Travis added that limited family money often leads black college students to borrow for their studies and graduate with high debt loads. This can limit access to business loans and other investments.

These factors often give black entrepreneurs little choice but to dig into their savings, if they have any. Incentives for capital formation, personal savings, and heritability of family wealth might begin to address this black/white disparity.

Josetta Shropshire, president and CEO of Positive Promotions Ltd. in Avondale Estates, Georgia, understands these challenges. After leading her TV- and video-production company for 20 years, she wonders how much more she could have accomplished absent the financial barriers that she faced.

“I’ve made a lot of sacrifices,” Shropshire said. “But just think what would have happened and what can happen with access to capital. I mean, just think about how much further along this whole thing would be if it weren’t so tight financially.”

Worse, Shropshire said black business owners feel alone in their quest for success.

“Nobody, and I mean nobody, is fighting for black businesses,” she said. “Our families, our ancestors, have built this country, and we ought to have more access to capital without going through all of these hoops that we have to go through.”

According to a 2013 Nielsen report, black spending power could soar beyond $1.1 trillion this year. The black-consumer population is growing more quickly than others, and its massive consumption and investment potential waits to be unleashed.

Such economic power has allowed Nia Damali to operate Atlanta’s Medu Bookstore for more than 20 years. Independent bookstores across America have collapsed beneath corporate giants like Barnes & Noble, Amazon.com, and Walmart’s book section. E-books, via Kindle and other devices, also pressure mom-and-pop-owned black bookstores.

Damali survives, but “It’s a challenge, especially today, because we’re competing with so many different things — mostly electronically,” she said.

Damali’s charming bookstore in Greenbriar Mall underscores the importance of having successful black businesses in urban neighborhoods. Medu is a must-visit place for many Atlanta-area authors who feel indebted to Damali’s perseverance and community spirit.

“We’re always having events in the store,” Damali said. “Book signings, children’s events. We do lectures every third and fourth Thursday of each month. We’re trying to stay relevant.”

When the economic slump forced Damali to shrink her staff in 2009, she increased the amount of care and attention that she gave to each customer. She believes these gestures helped foster support and loyalty even in these unsettled times. She very explicitly expresses her gratitude after each transaction.

“Thank you for supporting us,” Damali tells her patrons. “Thank you for keeping us here.”