According to the newly released 2024 Wells Fargo Impact of Women-Owned Businesses report, Black women-owned businesses are on the rise. The report states that Black women’s small businesses grew to 2.1 million between 2019 and 2023, generating $98.3 billion in revenue for the U.S. economy. Despite the financial challenges brought on by the pandemic, these businesses demonstrated adaptability and resilience.
Black women represent 13.9% of all women in the U.S. but take up a slightly greater percentage -14.8%- of all women-owned businesses. They are the only demographic with a greater-than-majority share of businesses owned than their male counterparts. Although average revenue in 2023 for Black women-owned businesses was smaller compared to women-owned employers generally and Black men-owned employers, their revenue grew at a faster rate.
The 2008 financial crisis had a greater long-term impact on businesses owned by Black women. While businesses owned by women in general had generally recovered and surpassed average revenue levels by 2019, Black women-owned businesses struggled. Their average revenue was $35,600 in 2019 compared to $40,400 before the financial crisis. However, the pandemic was different, with Black women-owned businesses emerging stronger from the economic shock.
The average revenue for Black women-owned businesses declined in 2020 due to their involvement in industries such as restaurants and retail, which were more likely to be affected by lockdowns. These businesses had little financial cushion to fall back on and struggled to access federal stimulus money. However, the expansion of the Paycheck Protection Program (PPP) loans to Community Development Financial Institutions (CDFIs) and minority depository institutions, which have a track record of serving minority and women-owned businesses, increased their access to capital.
Additionally, corporations increased or started making philanthropic contributions to CDFIs during the pandemic which allowed them to provide grants, lower interest rates, cover loan losses, and improve technology to speed up the delivery of capital to business owners. The resurgence of the Buy Black movement following the death of George Floyd and the Black Lives Matter protests also benefited Black women-owned businesses. Celebrities focused attention on Buying Black and retailers supported the movement by providing shelf space and visibility.
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Even as Black women-owned businesses experience growth, Black women continue to face distinct challenges in becoming entrepreneurs. They have a harder time accessing outside financing, are less likely to receive full or partial financing, have less substantial business experience, and lack the networks or social capital to connect them to financial capital, expertise, and services. Black women-owned businesses also tend to be smaller and are less likely to be employer firms because entrepreneurs are supplementing income from other jobs. According to the report, shares of employment and revenue across the demographic are far less than those of all women-owned businesses.
Programs that provide targeted grants and low-interest loans, along with technical assistance, training, and mentorship can support Black women-owned businesses in closing the revenue gap. Another growth strategy is certification as a women-owned business, which can open doors to business development opportunities. Many local, state, and federal government agencies, as well as corporations, have supplier diversity programs that offer matchmaking services, mentorship, training, and networking opportunities, ultimately increasing the visibility of women-owned businesses.