Take a walk down the streets of D.C. today, and you’ll quickly notice that neighborhoods have changed. Well over a year into the pandemic, and many small businesses are still struggling to survive.
Expenses — and sometimes even just rent — are outpacing revenue for many local small businesses and are having a disproportionate impact on Black- and Latinx-owned companies. According to a JPMorgan Chase Institute report, these businesses often experience lower revenues and profit margins, with Black-owned companies earning 59% and Latinx-owned companies earning 21% less than white-owned peers in their first year.
History tells us that an inclusive economy can be a more resilient economy — one with more opportunities for growth. An eye-opening study from Policy Link outlined that if gaps among racial groups were eliminated, the United States might be 14% richer annually. Across the nation, many of us are wondering: How can we equitably recover from the pandemic more efficiently and inclusively?
One way to do that is to invest in minority depository institutions (MDIs) which, in addition to traditional lending and support, are funneling needed capital into communities and helping to level the playing field for local business owners.
Even before the pandemic infiltrated D.C., many Black-owned small businesses were already struggling. Skyrocketing rents and property taxes, unequal access to funding and loans, and gentrification of urban neighborhoods forced many businesses to shutter. Once government-mandated nonessential business closures, stay-at-home policies and social distancing were added to the mix, more than half of Black-owned businesses faced collapse.
Beyond this, lending practices are also putting Black-owned businesses at an unfair disadvantage in D.C. Black and Latinx business owners are twice as likely to be denied loans and are more likely to receive lower loan amounts and pay higher interest rates. They are also more likely to lack the resources, capacity and existing relationships with traditional lenders to cushion through a crisis.
So, how do we ensure the American Dream remains within reach for Black business owners, especially with added obstacles stemming from the pandemic?
Community support, engagement and public-private partnerships are just a few of the approaches needed to spark long-term, holistic economic recovery. The deep trust and expertise that MDIs hold in their local communities, coupled with the funding and resources large financial institutions offer, can help stimulate vital economic growth where it’s needed most. This is why JPMorgan Chase is working alongside D.C.-based CityFirstBroadway — the largest Black-led MDI in the nation — to help them do what they do best: enable growth and prosperity in our communities.
JPMorgan Chase recently built on its long-standing relationship with CityFirst Bank through an equity investment in Broadway Financial, which merged with CityFirst in April 2021to create CityFirstBroadway. JPMorgan Chase and CityFirstBroadway know that we can impact change when we work together. And together, we’re providing critical capital for small business development, nonprofit community facilities and affordable housing in D.C.’s low-to-moderate income communities.
Investments in MDIs have a tangible, long-standing impact on our communities. Take H2 Design Build, for example. Founder Harvey Yancey, a local affordable housing developer, is focused on creating access to homeownership in an increasingly unaffordable city. He’s doing this by constructing much-needed workforce housing, delivering new townhomes in D.C.’s most distressed communities, to ultimately help his community recover and rebuild. Yancey’s focus on homeownership also helps families build generational wealth, establishing financial foundations for years to come.
As a Black developer, Yancey quickly discovered that funding projects while growing a business would be his biggest challenge. Enter CityFirstBroadway, which has been helping Yancey secure access to capital so H2 Design Build can remain self-sufficient as it continues to grow. The support has allowed H2 to triple its capacity, and focus on long-term goals rather than short-term challenges.
Yancey’s core purpose is threefold: to become a successful business owner, to change the trajectory of his own family’s life, and to help other families in underserved communities access safe and affordable housing. He encourages other Black small business leaders to use his career journey as inspiration, letting them know there is a way to thrive despite today’s challenges.
As we look beyond the pandemic, partnerships between MDIs and large financial institutions offer just one avenue to help D.C.’s minority business owners access the resources they need to thrive. Our goals are ambitious: level the playing field for minority business owners, create new sources of generational wealth and spur opportunity in our communities. Together, we’re harnessing the power of public and private partnership today to equitably build and advance our communities of tomorrow.