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For Black-owned businesses, concerns extend beyond inflation, supply chain issues

By Amanda Caroline  •  September 21, 2022  •  23
“When something is bad for all small businesses in America, it’s worse for Black-owned businesses,” a Black economist says.
Keith Millner, co-owner of Jersey Mike's sandwich shop in Atlanta, works behind the counter on Sept. 17, 2022.
Keith Millner, co-owner of Jersey Mike's sandwich shop in Atlanta, works behind the counter Saturday.Rita Harper for NBC News

When Keith Millner, wife Charmaine and two of their friends opened a Jersey Mike’s Subs sandwich shop in Atlanta in 2019, they had no idea they would end up working behind the counter.

Their doors opened in November 2019, four months before the Covid pandemic shut down the country. When businesses started reopening in July 2021, the nature of commerce had changed — and Black businesses felt the reverberations. For this group at Jersey Mike’s, part of the work became finding dedicated workers post-pandemic. With little to no options, they were forced to don aprons and hats and roll up their sleeves.

“It’s either that or close the business,” said Millner, a former commercial banker who now trains individuals and organizations on corporate culture, public speaking and other areas. “We were trained on every aspect of the business. So, yeah, we ran the counter, made sandwiches, worked the grill, ordered inventory — whatever it took. And we still do.”

A recent study of small business owners by the U.S. Chamber of Commerce found that inflation and supply chain issues are the top challenges entrepreneurs face today. However, Black business owners, like Millner and Co., face other unique hurdles that are specific to the Black community.

Unlike their white counterparts, Black businesses deal with systemic racism — a fact highlighted in a study on the government’s Payment Protection Program (PPP). The study shows that there are structural inequities “built-in to the administration of the program, the application process, and the fee structure.” Additionally, Black businesses often encounter racism and discrimination when securing bank financing, which leads to them having difficulties acquiring loans.

“We know that when something is bad for all small businesses in America, it’s worse for Black-owned businesses,” said economist Nicholas J. Hill, the Dean of the School of Business at HBCU Claflin College in Orangeburg, South Carolina. “So, if there’s any type of economic shock or supply shock, like the pandemic, it is going to hit us a lot harder.”

Owners of Jersey Mike's sandwich shop in Atlanta, from left, Keith Millner, Charmaine Ward-Millner, Nicole Williams and Eric Harrison.
Owners of Jersey Mike's sandwich shop in Atlanta, from left, Keith Millner, Charmaine Ward-Millner, Nicole Williams and Eric Harrison. Rita Harper for NBC News

There has also been a massive increase of Black workers wanting flexibility instead of working traditional 9-to-6 schedules, leading to labor shortages, according to a study by Future Forum. 

A Future Forum/Slack survey of 5,448 workers found that 83% of Black workers want a flexible working schedule to create a work-life balance, which creates a labor shortage for Black business owners serving the Black community, especially in the service industry. Millner’s Jersey Mike’s in Atlanta is located in an area with a largely Black demographic and workforce. Millner and his corporate executive co-partners Charmaine Ward, Eric Harrison and Nicole Williams say these stats coincide with their ongoing staffing issues. 

“Their freedom and flexibility in their schedule are more important to them than a regular paycheck,” Millner said of many young Black workers he has employed. “And so, they will drive Uber or Lyft. They will take the occasional odd job or they’ll go work for a moving company for a day or two or they’ll take four roommates so that they can split their rent. They’re making a lot of different choices from a lifestyle standpoint. And it impacts business.” 

The challenge of securing funding

The Chamber of Commerce study said that 85% of small business owners say they are concerned about the impact of inflation on their business, up from 74% last quarter. One in three small business owners call inflation their highest concern and 67% of them have raised prices in response to inflation. Those concerns weigh heavily on Black-owned businesses, too. But the biggest hurdle is finding those willing to finance their business.  

Maya Barfield, a veterinarian who owns Willow Brook Animal Hospital in Dallas, was astounded and deflated when, despite having pristine credit and attempting to purchase an established successful business, she and her husband were refused bank loans.

“You put together a great portfolio and it’s not enough,” Barfield said. “A process that should take 30 to 45 days took us six months. It was exhausting. Our white counterparts who are on equal footing had no such problems.”

She and her husband, a pharmaceutical company executive, had to use programs such as Local Initiatives Support Corporation (LISC)’s Black Economic Development Fund to secure the resources to procure their business.

This concern is unique to Black entrepreneurs. A number of studies and organizations point out various discrepancies in lending practices, all of them pointing to Black entrepreneurs being denied at an exponentially higher rate than non-Blacks. The Federal Reserve found that over half of Black business owners were rejected for bank loans, which is twice the rate compared to white business owners.

The U.S. Small Business Administration’s flagship 7(a) program decreased loans to Black businesses by 35% in 2020, the largest drop in lending to any race or ethnic group tracked by the agency.

Millner and Co. had a curious experience when attempting to open their Jersey Mike’s restaurant. They received two approval letters from major banks. But days before closing, they were told they could not be funded.

“We have A-1 credit—all of us,” he said. “We had purchased equipment and the initial inventory, signed a 10-year lease and hired people. And then we had to scramble.

 “I used to be a banker, so I know the drill. This was not a common practice, approving someone and then pulling the offer just before closing.”

Because they are well-connected in Atlanta, they were able to use their resources “and find alternative funding,” Millner said. “But it was incredible we had to go through that.”