Black businesses took off in the pandemic, but funding remains a hurdle

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Amirh Davis conceived of her business idea 10 years ago, when she gave birth to her first child and was confronted with the dearth in childcare services that working parents across the country contend with.

In March 2020, Davis joined the throngs of women going into business for themselves, launching Pillar Cowork — a coworking space that also provides childcare.

Business creation had stagnated in the U.S., but women — and Black women in particular — were bucking the trend. Between 2017 and 2020, Black women business creation rates jumped by 18%, according to data from the Brookings Institution.

That’s not to say it’s been an easy journey. Davis’s brick and mortar opened in Lafayette, Calif. two weeks before officials instituted a shelter-in-place order, putting her and her cofounder at a disadvantage off the bat. Her challenges started long before then, however, as she tried to secure funding for the business.

“At that time I was a stay-at-home mom, so getting traditional capital wasn’t a thing — nobody wanted to lend to me because I wasn’t making money,” Davis said. “A lot of times when I hit a dead end, people would ask if I had family or friends I could get funding from. In minority communities, you often don’t have the capital to contribute to these kinds of things.”

Her cofounder had capital on hand to put into the business, but Davis ended up turning to her 401(k) for her portion — a route many small businesses owners are forced to take after being turned away by traditional lenders.

Davis’s experience is not unique. Research shows that Black business owners and other minority groups struggle to get financing, resulting in a lower business creation rate. Just 3% of companies in 2020 were owned by Black entrepreneurs.

The pandemic helped turn that around. As workers were laid off or forced to exit the workforce to take care of children or loved ones — the very reason Davis started Pillar to begin with — they turned to entrepreneurship instead.

During the height of the pandemic, women were far outpacing men in starting businesses, buoyed by consumer adoption of e-commerce and the flexibility of working from home. But coming out of 2022, those numbers began to dwindle again as funding dried up and many women chose to return to the stability of a corporate job with benefits.

Davis isn’t giving up, though. Pillar is finally breaking even and the childcare center is at full capacity. Next up is expanding to weekend and evening events, when the coworking space isn’t being used.

What advice would she give to those looking to start a business today?

“Expand your network and talk to as many people as you can, because you never know who has resources that can help you,” she said. “Tell people what you need.”

August marks National Black Business Month. We asked other Black entrepreneurs what advice they would share — see what they had to say here.

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