The COVID-19 pandemic has disrupted many small and medium-sized business operations in the United States. Immigrant and minority owned small businesses, or more broadly, Black, Indigenous, and People of Color (BIPOC), are more vulnerable because they have less financial protection, and their small businesses tend to be in industries severely affected by the pandemic.
Considering the importance of promoting small businesses in our
Twin Ports region of Duluth, Minnesota, and Superior, Wisconsin,
we found there is a need to identify potential barriers facing
BIPOC businesses to access government and community
resources especially under trying circumstances of the
Our research idea led us to applying for the Morgan Fund grant of the Duluth Superior Area Community Foundation (DSACF). We were glad that the DSACF took considerable interest in our research application and decided to approve our grant application. Thanks to the Morgan Fund grant, we were able to pursue our twofold research objectives: (1) To examine how COVID-19 impacted BIPOC businesses in Twin Ports; and (2) To identify what forms of actions were taken by private, public, and non-profit organizations including the local financial institutions to assist BIPOC entrepreneurs in weathering the negative implications of the COVID-19 pandemic. For our project design, we applied a multi-design mixed method approach that includes both quantitative and qualitative analyses using data from online surveys and focus group discussions. The grant fund allowed us to hire two (2) undergraduate students to assist us with our project and thus, helping the students to gain valuable research experience through this project.
While implementing our project design, one of the first major challenges that we encountered is locating a comprehensive list of BIPOC businesses in the region. Although the study team were able to put together a comprehensive list of eighty-four (84) businesses owned by the BIPOC community of Twin Ports, we acknowledge that a good number of BIPOC entrepreneurs might be left out from the list because of their lack of strong presence in the Twin Ports community especially the ones with sole proprietorship business status.
Findings from our online survey of BIPOC entrepreneurs in the Twin Ports reveal that exactly 50% of the respondents had access to COVID-19 relief funds. This implies that there exist some potential barriers for half of the BIPOC owned small businesses for not being able to access COVID-19 relief funds. Some of the barriers that the BIPOC entrepreneurs revealed were: (1) business operating part-time; (2) started business during mid-pandemic; (3) could not provide proof of loss of revenues; (4) not qualified to apply if self-employed or having independent contractor status; (5) not having a storefront; (6) lack of communication from the banks/financial institutions about the status of application; (7) grants prioritized for entrepreneurs issuing W2s for their payroll workers compared to entrepreneurs issuing 1099 for non-payroll workers. Regarding types of COVID-19 relief funds, 33.33% of the BIPOC small business owners in the Twin Ports accessed Paycheck Protection Program (PPP). The next most-utilized COVID-19 relief fund is the Economic Injury Disaster Loans (EIDL). 25% of the survey respondents revealed applying for EIDL. The rest of the minority business owners applied for PPP loan forgiveness, Restaurant Revitalization Fund, and State or Local government programs. None of the BIPOC small business owners who participated in the online survey picked Paid Sick Leave and Paid Family Leave Credit, Employee Retention and Rehiring Credit, and other Federal programs.
Our online survey of organizations supporting small businesses in Twin Ports included the local chambers of commerce, small business association/small business development centers, nonprofit corporations representing foundations and trusts, financial institutions, local government, and municipalities, etc. The majority of these organizations that are directly involved with supporting small business developments of Duluth and Superior shared that a larger percentage of BIPOC owned businesses: (1) struggle to have their finances organized; (2) do not have appropriate documents for tax filing; and/or (3) have not established the banking relationships to get financial support for their businesses. Survey responses also revealed cooperation among non-profit corporations to support BIPOC businesses. However, most of the respondents mentioned the importance of forming stronger relationships with the BIPOC business community, working with trusted BIPOC organizations and community partners/allies, opening programs specifically to support BIPOC startup businesses, and identifying ways to utilize local resources to help BIPOC entrepreneurs to navigate existing and potential barriers, etc.
Focus Group Findings
Our focus group data involving BIPOC entrepreneurs reveals that many BIPOC owned businesses struggled, at least initially during the pandemic. Many restaurants, coffee shops, beauty salons, etc., had to find ways to keep their businesses going. We found some common themes among the BIPOC entrepreneurs who took the online survey and the ones who participated in the focus group discussion sessions regarding the factors behind the difficulties accessing various COVID-19 relief funding, such as, inquiries about the funding were not answered, more emphasis towards loans rather than grants, complex application process, limited available funding, failure to meet funding criteria due to lack of evidence/documentation to support application, etc.
Our data analysis of the focus group involving organizations supporting small businesses in Twin Ports reveal that many organizations find there are lots of creative business ideas among BIPOC entrepreneurs. However, the main challenge is to translate these creative ideas into workable business plans. The participating organizations during the focus group discussion identified lack of technical skills and lack of meaningful networking opportunities are the two major impediments among potential BIPOC entrepreneurs trying to establish their businesses in the Twin Ports. Conversely, participating organizations indicated how open they are and willing to work with anyone albeit acknowledging the fact that, at least by some, that they have not made a conscious effort to reach out to BIPOC entrepreneurs. It was, therefore, not surprising that some BIPOC entrepreneurs have decided not to join, cancelled their membership, or did not seek the services of these organizations. It is, however, important to point out that some organizations in the region have done a phenomenal job in widening their networks.
Based on our findings, we felt equal emphasis should be put into building social capital besides financial and physical capital to support BIPOC businesses by the Twin Ports government and other key community stakeholders.
To ensure familiarization and accessibility of community
resources of technical support, we felt both parties, i.e., BIPOC
entrepreneurs and the community stakeholders including the local
government, should make concerted efforts to know each other.
This could be achieved through workshops, project demonstrations, and other educational programs targeted for BIPOC owned businesses where local organizations could collaborate with Chambers of Commerce and the City Administrations. There should be continual effort to update the BIPOC Business Directory with the intention to facilitate marketing and promotion of BIPOC businesses as well as developing targeted programs for outreach, networking, funding, contracts, etc. From the feedback received from our online surveys and focus group discussions, we firmly believe that establishing a Twin Ports BIPOC Chamber of Commerce can help address the needs of BIPOC entrepreneurs by working collaboratively with the Duluth and Superior Chambers of Commerce. The Twin Ports BIPOC Chamber of Commerce can work with local partners to form BIPOC-Specific Community Development Finance Institutions (BIPOC-S CDFIs) to assist entrepreneurs in overcoming systematic barriers in accessing funding. Besides funding, local small business development organizations and partners can offer BIPOC-Specific Small Business One Stop Incubation/Business Centers in Twin Ports to assist with business plan development, accounting, marketing and advertisement, legal, and other services. We also recommend exploring the possibility to advance additional branches under Twin Ports Chambers of Commerce, CDFIs, Incubators/ One Stop Centers, and the local financial institutions that could address BIPOC entrepreneurs’ specific cultural needs around lending practices.
The list of recommendations that we propose with emphasis on social and cultural capital formation involving the BIPOC community and other Twin Ports’ community stakeholders, we are hopeful that overall economic, community, and social well-being of the Twin Ports could be enhanced to a greater level. Implementation of our proposed recommendations that are built around community feedback would usher in the small business and community developments that the Twin Ports needs to project itself as a diverse, inclusive, and welcoming community. The future looks bright for Twin Ports if it is ready to take its potential to the next level.