Adapted from Federal Reserve Bank of Atlanta; Chart: Axios Visuals

Entrepreneurship or starting a business has often been heralded as a way to reduce the U.S. racial wealth gap. However, Black Americans' attempts at entrepreneurship are often foiled by an initial lack of capital and an inability to obtain financing, especially through government programs.

The big picure: This was most recently evidenced when Black-owned small businesses were largely shut out of financing from the SBA's Payroll Protection Program.

What's happening: A 2017 report (the latest available) from the Department of Commerce's Minority Business Development Agency (MBDA) found...

  • Minority-owned businesses pay higher interest rates on loans than white-owned businesses.
  • Further, minority-owned firms have less than half the average amount of recent equity investments and loans than white-owned firms, even among those with $500,000 or more in annual gross receipts.

By the numbers: According to the Federal Reserve Bank’s 2016 report on minority firms, "40% of firms owned by people of color received the full amount of capital sought, compared to 68% of nonminority-owned firms."

  • "Black-owned firm application rates for new funding are 10 percentage points higher than white-owned firms, but their approval rates are 19 percentage points lower."
  • "Forty percent of nonapplicant Black-owned firms did not apply for financing because they were discouraged (i.e., they did not think they would be approved), compared with 14% of white-owned firms and 21% of Hispanic- and Asian-owned firms."

One level deeper: The Atlanta Fed's 2019 report on minority-owned firms found that even though Black-owned businesses were the highest percentage of firms expecting revenue growth and employment growth over the next 12 months, they were significantly less likely to get loans.

  • In 2018, 81% of Black-owned businesses expected to see revenue growth in the next year compared to 72% of white-owned firms.
  • Black-owned businesses also saw the most significant growth in share of firms that went from breaking even or operating at a loss to making a profit between 2016 and 2018.
  • And 60% of Black-owned firms expected to increase employee headcount in the next year, compared to 43% of white-owned firms.

Reality check: "A review of national and regional studies over several decades indicates that limited financial, human, and social capital as well as racial discrimination are primarily responsible for the disparities in minority business performance," the MBDA's report finds.

Go deeper

Updated Jul 23, 2020 - Axios Events

Watch: Small business recovery in Colorado

On Thursday July 23, Axios Media Trends author Sara Fischer hosted the fourth of a six-event series on small business recovery across America, focusing on how small businesses in Colorado have pivoted during the coronavirus outbreak, featuring Colorado Governor Jared Polis and Ryan Cobbins, owner of Coffee at The Point.

Governor Jared Polis discussed his frustration with federal level response to the coronavirus and highlighted state-level funds in Colorado that have been established to support small businesses.

  • On the lack of coordination at the federal level: "We've had 50 different responses in each state. Each of the U.S. governors has really largely been on our own...But what we really need, because we do have freedom of movement between our borders, is a better coordinated national response."
  • What the state is doing to help small businesses: "Many Colorado small businesses were able to get two months of payroll from the federal government, but it's not enough. So we did two things here in Colorado. We created a $20 million fund...Then we established a larger $250 million climber fund, which is a loan facility for businesses that aren't quite able to be credit worthy to get loans they need directly from banks."

Ryan Cobbins discussed his experience as a small business owner and how Coffee at The Point has navigated safety measures and addressed the concerns of employees during this period.

  • On how the politicization of masks impacts his workers: "Some people have an extreme [reaction] around masks, to a point to where they get a little bit abrasive...So we make sure that our staff stays careful and we provide them with the language to speak to customers in an appropriate way so that things don't escalate."
  • On how his business is using this slow period: "We've taken the advantage of the time to review our process and procedures, get to know our staff on a deeper level, review our vendors and so forth...This period gives us the time to do so."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with Policy Programs Manager for Economic Impact at Facebook Diana Doukas, who discussed Facebook's recent research on the global economic impact of coronavirus and its particular impact on women-run businesses.

  • How the division of labor at home affects which businesses are closing: "Thirty-three percent of women business owners are finding that household responsibilities are falling to them. In a report that we've just released with the World Bank and the OECD, we're seeing a disparity between women-run and men-run businesses, where 12% more women-run businesses are closing."

Thank you Facebook for sponsoring this event.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 12:30 a.m. ET: 18,288,573 — Total deaths: 693,805 — Total recoveries — 10,916,907Map.
  2. U.S.: Total confirmed cases as of 12:30 a.m. ET: 4,713,562 — Total deaths: 155,469 — Total recoveries: 1,513,446 — Total tests: 57,543,852Map.
  3. Education — Fauci: Schools can reopen with safeguards, but those in virus hot spots should remain closed
  4. Politics: White House will require staff to undergo randomized coronavirus testing — Pelosi says Birx "enabled" Trump on misinformation.
  5. Sports: 13 members of St. Louis Cardinals test positive, prompting MLB to cancel Tigers series — Former FDA chief says MLB outbreaks should be warning sign for schools.
  6. 1 🎥 thing: "Tenet" may be the first major film to get a global pandemic release.
Updated 3 hours ago - Science

Hurricane Isaias lashes the Carolinas

People walk through floodwaters on Ocean Blvd. in Myrtle Beach, South Carolina, on Monday. Photo: Sean Rayford/Getty Images

Hurricane Isaias made landfall as a Category 1 storm near Ocean Isle Beach in southern North Carolina at 11:10 p.m. ET Monday, packing maximum sustained winds of 85 mph, per the National Hurricane Center (NHC).

What's happening: Hurricane conditions were spreading onto the coast of eastern South Carolina and southeastern N.C., the NHC said in an 11 p.m. update. Ocean Isle Beach Mayor Debbie Smith told WECT News the eye of the storm triggered "a series of fires at homes" and "a lot of flooding." Fire authorities said they were responding to "multiple structure fires in the area."