As entrepreneurs and small business owners across the country celebrate Small Business Week this year, it’s hard not to think back to last year and reflect. This time last year, the Small Business Administration was rescheduling Small Business Week events as we watched the recession unfold. Thousands of business owners were making difficult decisions to furlough staff or close their doors after serving their local communities for decades. At the same time, many other businesses were transitioning, figuring out how to operate within social distancing guidelines to stay afloat.
At Next Street, a mission-based firm that mobilizes capital, customers, and capabilities to small businesses and entrepreneurs, we heard first-hand from thousands of clients who were impacted, including Tanya Rynd, co-owner of Superfine, who shared the challenges of running a restaurant with limited capacity and a disrupted supply chain.
Like Tanya, we worried about the long-lasting impact of the recession on business owners, neighborhoods and the national economy. Afterall, small businesses comprise more than 99% of businesses in this country and are responsible for 64% of new private-sector jobs. We were particularly worried that certain sectors and communities, including black-owned businesses, would be disproportionately impacted, left out of recovery programs, unable to unlock capital, and excluded from support services that they would need to survive and thrive. In fact, only 2% of SBA funding reaches Black-owned small businesses, and only 17% of black-owned businesses say their funding needs are met, compared with 39% of white-owned businesses.
Fast forward to today. While some experts estimate that more than 100,000 businesses have closed because of the pandemic, including almost half of Black-owned businesses, there is also renewed hope. New business applications are at an all-time high and changes in the latest round of federal stimulus are aimed at helping the most vulnerable small businesses.
Organizations across the small business ecosystem are stepping up to support entrepreneurs. For example, we have seen corporations announce major small business initiatives, like Starbucks’ support of black and brown business owners, and Verizon’s commitment to bridging the digital divide. At the federal level, new programs like the Restaurant Revitalization Bill will reach some of the hardest hit sectors. And cities across the country, as in Cook County, Illinois, are banding together business support organizations to deliver outsized impact to local businesses.
Small businesses like Superfine are gaining steam. Tanya’s restaurant has seen a recent resurgence as stimulus programs helped buoy her business and restaurant restrictions eased. She applied to 10 stimulus programs and credits Paycheck Protection Program, Brooklyn Alliance Capital grant, and other funding for helping her navigate rough times.
Tanya is optimistic about her business’ future and she is not alone. The Small Business Optimism Index rose another 2.4 points in March to 98.2, bringing it up to its average historical rating for the first time since last November. Survey respondents are more optimistic about the U.S. economy and have upwardly revised their expectations especially for the first half of 2021.
This Small Business Week, we have seen firsthand how small businesses owners have risen to the occasion and pivoted to survive the last year. Entrepreneurs like Tanya used the pandemic to expand her delivery business, gain efficiencies, and engage her community in her restaurant’s vision. Tanya is also using grant and stimulus funding to pay off debt.
This past year, more than ever, we have seen the grit and resilience that small business owners display every day. Now we must have faith in their ability to thrive, and do what we can to help them succeed despite the great challenges they face. That is why – in honor of Small Business Week – we are calling on Congress to update the Small Business Act that governs most small business policy today – to reflect the challenges that small businesses face now (not 70 years ago when it was first enacted).
Small Business Week this year is certainly something to celebrate, but it is also a reminder of the work that remains to be done. Today, we’re at the beginning of a small business recovery. Next year, we can prove we have built resiliency for the long term if we continue building on an equitable approach to small business recovery and development.