4. Shutdowns are hitting minority-owned businesses particularly hard
Millions of small businesses aren't expected to survive the coronavirus pandemic, and those owned by women and people of color are disproportionately feeling the pain of the economic shutdowns.
Why it matters: Minority-owned small businesses employ over 9 million people (about 15% of small business jobs) and generate more than $1 trillion in annual economic output.
- Businesses helmed by owners of color tend to be smaller than nonminority-owned counterparts with less of a financial cushion to weather prolonged closures, per a new McKinsey study.
- They also are more likely to be in industries highly disrupted during the pandemic, including food services, retail and personal care.
The big picture: Minority-owned businesses "are disproportionally operating in low-income communities and some of these underbanked areas where, per capita, they just don't have the same level of bank branches and bank infrastructure," said Margaret Anadu, head of Goldman Sachs Urban Investment Group, at an Axios digital event Wednesday.
- She noted that African American business owners have not been able to apply for the Paycheck Protection Program loans at the same rate as other companies.
Still, these business owners are showing creativity when it comes to taking care of their employees and supporting their communities during the crisis.
- In a McKinsey survey of more than 1,000 small businesses, 40% of minority-owned businesses have added services like free delivery and adjusted hours for elderly customers, compared with 27% of the overall small business owners surveyed.
Between the lines: In a striking paradox, minority-owned businesses are nearly 10 percentage points more optimistic than their nonminority counterparts about the overall economy's recovery.
- But they were 10 percentage points more pessimistic than their nonminority counterparts about their own businesses' sustainability.
What's next: Immediate relief for small businesses can take a number of forms: grants, low-interest loans, assistance dealing with negotiations, advertising credits and deferred rent payments, said McKinsey partner Deepa Mahajan.
- All small businesses are having to reinvent themselves with contactless payments, digital offerings and new services that appeal to homebound customers.
- "The old business models won't necessarily work, and there's only so much that relief gets us," Mahajan said.
Go deeper: Axios Deep Dive — A reckoning for small business